In an opinion piece, Peter Costello, Australia’s former Federal Treasurer, stresses the importance of protecting the fund going forward for the benefit of future generations. He rejects the idea of dissolving the fund to pay down debt or provide subsidies for renewable energy and public housing.
Costello argues that using the fund for the future now will prevent future generations from reaping the benefits in 2040, 2050, or 2060. Established in 2006, this fund was created to invest surplus funds and strengthen the government’s financial position in the long term.
The former Treasurer stresses that the fund for the future is owned by the government on behalf of taxpayers and not by individuals like a pension fund. Therefore, the government has the power to issue the fund by law.
Since its inception, the Fund for the Future has grown from an initial investment of $60.5 billion to over $202 billion. The average 10-year return was 9.1% per year. Costello notes that the fund has managed to generate substantial returns that can help meet government responsibilities.
Costello warns of the “backpacker” problem, in which one generation spends an asset that a previous generation built. He believes that proposals for future use of the fund must be approached with caution and stresses the need to identify the most pressing reasons for allocating the fund.
While renewable energy subsidies and debt reduction are major drivers, Costello argues that mechanisms, such as the Clean Energy Finance Corporation and the Australian Renewable Energy Agency, already exist to fund renewable energy initiatives. Debt reduction without sustained budget surpluses can also lead to renewed borrowing of the funds.
Finally, Costello emphasizes the importance of preserving the future fund for future generations and meeting the challenges of an aging society with rising costs, reduced economic growth, and low productivity. Maintaining the fund would ensure resources are available to meet future needs and ensure a brighter future for all Australians.
– Opinion: “Why Australia should preserve the future fund for future generations” – Peter Costello, The Sydney Morning Herald