Budget 2022: Future Fund quarantine pledge
Future Fund chairman Peter Costello has been told that the Albanese government will stick with the Coalition’s pledge to quarantine the sovereign wealth fund and keep it growing.
Jim Chalmers and Katy Gallagher have told Future Fund chairman Peter Costello that the Albanese government will stick with the Coalition’s pledge to quarantine the sovereign wealth fund and keep it growing to cover unfunded commonwealth superannuation liabilities.
Mr Costello – the nation’s longest serving treasurer and Nine chairman – has been reassured that the existing policy to not commence withdrawals from the fund until 2026/27 will be continued.
The fund’s assets are owned by the federal government and exist to “make provision for unfunded commonwealth superannuation liabilities” and ease long-term pressure on the budget. Under the 2006 Future Fund Act, governments could start drawing down on the fund from mid-2020.
As at June 30, after copping a $7bn hit over the previous three months amid volatility in shares, bonds and commodity prices, the total funds managed by the Future Fund were valued at $242.4bn.
The Treasurer and Finance Minister told The Weekend Australian there would be “no change” to the existing policy.
Senator Gallagher said the benefits of a performing sovereign wealth fund were enormous.
“We haven’t changed any position on that (the Coalition pledge). We had a good meeting with Peter Costello about it and his views on the Future Fund,” Senator Gallagher said.
“The Future Fund has been a huge success. Other funds have been established because of the success of the Future Fund. They’ve been built off the success of that. It’s a really useful thing for us to have in place.”
Dr Chalmers said “We won’t be proposing in Tuesday night’s budget a change to the arrangements we inherited for the Future Fund”.
“I’ve had a good discussion with Peter Costello, the chair of the fund, about the future of the Future Fund but we’re not proposing any changes to the arrangements that we inherited.”
In an August portfolio update, Mr Costello said the Future Fund had “successfully navigated substantial market falls” and that its small loss was a “pleasing outcome” considering the magnitude of the falls.
The loss came following a record return of 22.2 per cent, which Mr Costello described as a “period of exceptional stimulation through monetary and fiscal policy”. Mr Costello, who was appointed to the Future Fund Board of Guardians in 2009, is currently serving a five-year term as chairman, which ends in 2024.
Funds managed by the Board of Guardians include the Future Fund ($194.4bn), Medical Research Future Fund ($21.6bn), Aboriginal and Torres Strait Islander Land and Sea Future Fund ($2.1bn), Future Drought Fund ($4.5bn), Emergency Response Fund ($4.5bn) and DisabilityCare Australia Fund ($15.3bn).
In 2017, Mr Costello said the Future Fund would likely hit $300bn by 2027/28 enabling it to cover all future public servant superannuation payouts.
In its 2020/21 annual report, the Department of Finance listed the total commonwealth superannuation liabilities at $226.4bn.
The department administers six defined benefit schemes including the commonwealth superannuation scheme, public sector superannuation scheme, parliamentary contributory superannuation scheme, judges’ pensions scheme and federal circuit court judges death and disability scheme.
All of the programs are unfunded except the commonwealth superannuation scheme and public sector superannuation scheme, which are partially funded.
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