Election 2025: Double the fund: Coalition’s plan for budget repair

Peter Dutton would funnel 80 per cent of commodity revenue windfalls into two new Future Fund vehicles to pay down the nation’s $1.2 trillion debt bill and bankroll investments in regional Australia.

Peter Dutton at BlueScope Steel’s western Sydney factory. Picture Thomas Lisson / NewsWire

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Peter Dutton would funnel 80 per cent of commodity revenue windfalls into two new Future Fund ­vehicles to pay down the nation’s $1.2 trillion debt bill and bankroll investments in regional Australia, as the Coalition ramps up its ­attacks on Labor’s big-spending budget and deficits.

The Opposition Leader on Thursday will unveil a centrepiece of his economic strategy to turn around Labor’s projected decade of rising debt and deficits and pledge to restore fiscal guardrails the Coalition accuses Jim Chalmers and Katy Gallagher of abandoning.

The first major economic policy released by the Coalition during the May 3 election campaign – added to announcements including reducing the public service, scrapping expensive Labor programs and reshaping the energy market with nuclear and gas – commits to establishing a Future Generations Fund and a Regional Australia Future Fund.

The funds would be seeded from 80 per cent of positive windfall receipts variations each year, which would vary annually in line with fluctuating commodity prices. They would be financed on an ongoing basis by “real windfall revenue instead of new debt, bolstering the federal balance sheet and reducing net debt”.

The Coalition’s debt-busting, nation-building funds would lower debt to ease pressure on ­inflation and interest rates, support strategic infrastructure and economic reforms to boost investment and productivity, and strengthen regional economies by creating jobs and creating incentives outside capital cities.

After Mr Dutton in the first leaders’ debate on Tuesday night directly accused Anthony Albanese of overseeing the biggest-spending government since Gough Whitlam’s Labor in the 1970s, the Coalition will use its new policy to attack Labor for “wasting” record post-pandemic revenue upgrades that helped Dr Chalmers deliver two surpluses.

The Future Generations Fund, which is intended to put a “hard limit on spending growth”, will primarily focus on debt reduction while also supporting sovereign capability including defence and broader economic reforms to “drive a better Federation and a growing economy”.

It would include an emergency mechanism, underpinned by legislated rules and public accountability, allowing governments to draw down on it during times of national emergencies, economic shocks and geopolitical crisis.

Treasurer Jim Chalmers and opposition Treasury spokesman Angus Taylor before their debate. Picture: Christian Gilles/NewsWire

Opposition Treasury spokesman Angus Taylor, who met Reserve Bank governor Michele Bullock and other senior RBA ­officials on Wednesday to discuss economic uncertainty and share market volatility fuelled by ­Donald Trump’s trade wars, said “Labor has wasted the windfall and delivered higher debt, higher taxes, and higher spending”.

The Coalition says Labor has “blown over $400bn in extra ­revenue and still racked up $1.2 trillion in debt”, which had fuelled inflation and intensified the cost-of-living crisis.

Ahead of clashing with Dr Chalmers in their first election campaign debate on Wednesday night, Mr Taylor said the ­Coalition’s funds would prepare Australia for “future economic shocks and set the path for budget repair”.

“The Coalition will deliver a stronger budget for a stronger Australia,” Mr Taylor said. “This is a demonstration of our solid commitment to good budget management and creates much needed budget transparency, while building a stronger and safer Australia for future generations,” Mr Taylor said.

The Regional Australia Future Fund, which will be well-received by Nationals MPs and senators campaigning on the “Wombat Trail”, would help repair roads, boost access to healthcare, and lift education and childcare investment.

The regional fund would be established with a quarter of the 80 per cent in windfall gains until it grew to $20bn. It would allow for drawdowns not exceeding its annual return, which would be funnelled into additional support for regional programs. Based on recent windfalls the government has received, the $20bn regional fund would be realised swiftly.

Treasury, which predicts debt repayments will be the highest structural spending pressure in future budgets, is forecasting a decade of budgets in the red, including a $27.6bn deficit in 2024-25. The pre-election Economic and Fiscal Outlook released by Treasury and the Finance Department on Monday confirmed four years of deficits totalling $179.5bn and debt rising to $1.2 trillion.

Opposition finance spokeswoman Jane Hume said the nation-building funds would advance the Coalition’s record of “strong economic management”. “The Future Fund has contributed greatly to the sustainability of Australia’s public finances and reduced the intergenerational burden of government debt,” Senator Hume said.

The Future Fund, which was valued at $304.5bn in December, was established by former Liberal treasurer Peter Costello in 2006. The Abbott, Turnbull and Morrison governments set up additional future funds supporting medical research, Aboriginal and Torres Strait Islander land corporations, disability funding and drought resilience.

Since the 2022 election, the Albanese government has added Disaster Ready and Housing Australia funds.

Dr Chalmers on Wednesday rejected Mr Dutton’s attack that the Albanese government had been the biggest spending since the Whitlam government.

“The biggest-spending government since Whitlam was his government, the Morrison government, and he sat around the cabinet table,” the Treasurer said. “He said that they left us a balanced budget. They left us enormous deficits. We turned two of those into Labor surpluses.”

Dr Chalmers came under fire late last year after announcing he was overhauling the investment mandate of the Future Fund to drive capital into Labor’s agenda on affordable housing, green energy projects and critical infrastructure The Treasurer was criticised for undermining the “independence” of the Future Fund, now led by former Labor cabinet minister Greg Combet. National priorities in the new mandate include: increasing the supply of residential housing, supporting the energy transition for the net zero transformation and delivering infrastructure projects that would improve domestic supply chains.

The Future Fund, established to cover annual unfunded commonwealth superannuation liabilities, has been quarantined until 2026-27. Dr Chalmers has said he would keep the fund’s capital locked up until 2032-33.