Chalmers says Future Fund can’t be trapped in Costello’s past

Treasurer Jim Chalmers has accused his predecessor Peter Costello of being trapped in the past and being rolled into a “deliberately unhinged” attack on plans to encourage the $230 billion Future Fund to invest in new homes, renewable energy and cybersecurity.

A day after Costello said the proposal would ultimately cost taxpayers and potentially turn the fund into a “political slush fund”, Chalmers signalled using the plan as an election issue by accusing the Coalition of running interference to deal with housing affordability, climate change and infrastructure.

Treasurer Jim Chalmers says the world has changed since Peter Costello created the Future Fund in 2006.Credit: Alex Ellinghausen

The fund, created to cover the cost of public servants’ superannuation, has operated under a broad mandate to deliver returns at least 4-5 per cent above the inflation rate.

Under Chalmers’ proposal, the fund would still have to meet that mandate but would also “consider Australia’s national priorities in its investment decisions” where possible and consistent with its financial return remit.

Costello, who created the fund in 2006 and served as its chairman until this year, said the proposal – which the Coalition has vowed to overturn if it wins office – would reduce international respect for the fund, turn it into a “political slush fund” and encourage rent-seekers to pursue financial support for poor projects.

But Chalmers said the economy’s challenges had changed since Costello created the fund.

“The Future Fund’s not about what Peter Costello thought in 2006 ... the Future Fund’s not about the past. It’s about the future. The hint’s in the name of the thing,” he said.

“My job is not to take something that Peter Costello designed in 2006 and make sure that nobody ever improves it. My job is to make sure it improves and evolves.”

Shadow treasurer Angus Taylor accused the government of raiding the Future Fund for its own pet policies.

But Chalmers said the Coalition’s attacks were unhinged and ignored how other sovereign wealth funds acted under priorities set by their national governments.

The world’s largest fund, Norway’s $US1.8 trillion ($2.8 trillion) pension fund, has a range of restrictions including on fossil fuel companies. In 2020, it excluded Australia’s AGL from its portfolio of more than 9000 companies and assets.

Chalmers signalled the issue would be used in next year’s election campaign.

“The choice at the election … is the Labor Party, who wants more investment in housing, energy and infrastructure, and a Coalition that wants less investment in each of those things,” he said.

Fund chairman Greg Combet, a former minister in the Rudd and Gillard governments, said the institution had already looked to increase its domestic investments given global uncertainty.

He said the fund’s priority remained a return of inflation plus 4 to 5 per cent.

“If we do not see any attractive assets in that area we will not be investing, if we see attractive assets in that area we may well invest depending on the quality of the investment we’re looking at,” he said.

“We plan on making money for Australian taxpayers.”

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