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Tuesday, 28 February 2012
Page: 2158


Mr VAN MANEN (Forde) (16:25): I too rise to speak on the member for Melbourne's motion on the establishment of a new Australian sovereign wealth fund. In essence, Australia already has a sovereign wealth fund: the Future Fund. That was established by Peter Costello and is currently worth some $73 billion. I think that the work we as a coalition government did through the leadership of the Howard-Costello government when we paid off $96 billion worth of Labor debt and built a portfolio of assets in a Future Fund is a tremendous example of how an economy should be properly managed.

Whilst the primary purpose of that fund was to provide unfunded Public Service superannuation liabilities, I think it also provided some sort of model for what we could potentially look at in the future. In September 2011, Sovereign Wealth Funds News listed the Future Fund as the '14th largest sovereign wealth fund in the world'. The Future Fund played a crucial role in helping Australia combat the global financial crisis by providing vital liquidity to our banks in the initial fortnight of the panic on world capital markets, following the collapse of Lehman Brothers.

In principle, I think the idea of a sovereign wealth fund has merit. However, given our current economic position and thanks to the reckless spending and mounting debt under this Labor government, talk of expanding our sovereign wealth resources is purely both academic and premature.

If the Greens were serious about restoring resilience through a fund, they would not have recklessly demanded the establishment of the $10 billion Clean Energy Finance Corporation—the Bob Brown Bank—as a price for their carbon tax support. We have no certainty as to how that money will be spent and what economic return we will get. This fund would be established from borrowed money, which in the first place will put further upward pressure on our already mounting debt and interest rates.

I would like to stress that the views expressed in this place today, whether in support of or against an Australian sovereign wealth fund, will have little impact until a surplus is delivered and we start repaying the debt. I have previously mentioned in this place that under Labor we have seen four of the biggest budget deficits in our history. Labor continue to borrow $100 million per day and, in just four years, Labor have turned a $20 billion surplus into $167 billion in accumulated deficits and $70 billion in net Commonwealth assets into what will be $136 billion of net debt.

Currently, Australians are paying $100 million a week in interest, which is robbing our future generations of their wealth. Our annual interest payment on Labor's debt is some $7 billion a year—equivalent to the cost of seven hospitals or, to touch on a current topic, the funding of our NDIS. The Labor-Greens government cannot handle the budget, so why would we trust them with a national savings vehicle? In the past they have taken advantage of national savings vehicles.

For example, the coalition set up the $2 billion communications fund, where the interest was to be invested in telecommunications upgrades in rural and regional Australia in perpetuity. But that has not occurred because the current government had got their hands on it and milked it. Similarly, money put away in the Building Australia Fund was raided and the education endowment fund has been scrapped.

The temptation for politicians to raid sovereign wealth funds was recently referenced in an article in the Australian, entitled 'Sovereign wealth funds poor value for money'. The author, Adam Creighton, put forward his views, stating that sovereign wealth funds 'ultimately provide a tempting pot of funds for politicians to raid'. We do not need to tempt this government to spend money they should be saving. They are already doing a good job of that themselves. It would be far more productive to concentrate on getting back to surplus rather than establishing another fund. Put simply, we do not need another piggybank full of borrowed funds at risk of being pilfered by this government. We need strong economic policy that will guide us back to surplus. (Time expired)

Debate adjourned.