The raidable Future Fund

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]

5 thoughts on “The raidable Future Fund”

  1. On reflection I think you’re right that the best way to “lock in” the superannuation pay is to simply put it into funds. Perhaps the government could privatise the whole scheme. Maybe public servants could select a fund and have their entitlements rolled over. Or indeed the Government could pick a fund or several and put the money out there. I’d say index funds: no picking winners, “investing in all our futures”, less distortion of the stock market etc etc.

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  2. What an excellent idea to allow anyone to put their superannuation deductions into the future fund. In 1974 the insurance companies were asset rich but struggling to get people to pay premiums for life insurance as a method of saving for old age. The insurance companies fought hard to remove Gough Whitlam for suggesting universal superannuation and now the insurance companies operate the superannuation and wrap accounts used by many retired Australians.

    As a worker who has had 6 UniSuper accounts operating in the one year I am seriously over privatised superannuation funds. Since that time UniSuper is smart enough to identify when some one is working simultaneous contracts in different universities or even on different campuses. I have always said I would love to be a 55+ year old in the McDonald’s super / pension scheme as I doubt many 15 year olds will bother to roll over their super.

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  3. All too true – but you also miss the fact that the ALP isn’t planning to raid the cash (from T3 or surpluses) merely the remaining shares in Telstra – because they have been put in the fund differently to the cash, in a way designed to be easily accessed.

    The Treasurer is also disingenuous in claiming that Labor didn’t think to “save” for public sector employees super, given that Keating did think to deal with the issue of private sector super through the 9% employer contribution (which also restrained wages growth which eased inflation on the DEMAND side). Further, the Telstra dividend stream each year would probably have met liabilities as they fell due.

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