The largesse in the Budget and the redistribution of monies back to the electorate shouldn’t have proven a surprise, even if conventional wisdom is that budgets following elections are the ones in which governments make tough decisions. The economic cycle is out of sync with the political cycle and the money has been rolling in, thanks to high commodity prices, the high value of the dollar and company profits which have grown far faster than the economy. It won’t always be like this. Large tax cuts are one way of keeping the accumulation of surpluses from ultimately getting into the hands of an interventionist Labor Party, making any reversal of the structural changes in the economy all the more difficult. So too is locking up spare money in Futures Funds, and handing over their control to independent boards.
The Futures Fund has the appearance of great prudence, just like the efforts to cut government debt. Public servants contribute to their superannuation, but at nothing like the rate which it costs. The difference is paid out every year from consolidated revenue. In about 20 years, according to the actuaries, the accumulated liabilities will be about $100 billion—not all, or course, to be paid out at once. Is it not simply good management to put aside money now so that those liabilities can be met? Especially while there are large surpluses? Does it not make further sense that the proceeds of assets sales, such as the remainder of Telstra, are put into funds given that they are no longer needed to retire debt? If the proceeds of Telstra’s sale were simply to fund government spending, would that not be, in Lord Avon’s words, selling the silver to pay the grocery bill?
It certainly is a good idea to put money into assets and infrastructure which provide the nation with a net return. But it is by no means certain that treating the proceeds as investment money to be played with on national and international stock exchanges—or in inflating the value of real estate, as will happen if it is locked up in a ‘commercially-focused’ fund run ‘independently’ by business—will produce a better result for the nation than investing it in roads and railways, schools and universities, hospitals and health-care facilities; perhaps even, given the source of the proceeds, in communications and technology.
The alternative argument—that we should tighten our belts, and reduce people’s