OK so I have some questions (and I am not the only one). The very existence of the Future Fund and its spin offs — funds in government hands but managed like public ones — seems to tell us that they are there to be raided. Here is the logic: if those funds were so well managed and so valuable in terms of realising scale economies, wouldn’t a government want to open them up as a super-choice for all Australians? The answer is surely yes. Now that isn’t the case so one has to ask why. One possibility is that, if it were open to the public, the fund would have to comply with regulations and also ‘lock in’ (the Treasurer’s favourite phrase) its independence. That is, it would have to privatise it in all but name. So if the Govenment isn’t doing that, doesn’t it mean that it wants the option to raid it in the future?
Of course, my assumption here is that the fund itself is a great performer relative to the market. But if it isn’t that, why have it? Because you might want to raid it in the future?
By the way, if there is some legal issue in doing this, why not make all of the trades and holdings publicly available or at least an index measure of the fund’s daily value? Then open funds could be set up to mimic its returns?
Anyhow, these are just some questions I have.
[Update: This post appeared in Crikey on 14th May, 2007]