Peter Costello and John Howard launched a hysterical attack on Kevin Rudd’s Future Fund broadband raid yesterday but in the process invited some scrutiny on the $50 billion accounting fraud they have committed.

The PM and his Treasurer continue to claim they have “paid off Labor’s $96 billion debt”, when this is simply false because the Federal Government currently has $56 billion in debt outstanding, as this chart shows.

Okay, there is currently about $50 billion in the Future Fund but that money is supposedly to offset unfunded superannuation liabilities which Costello told Parliament yesterday had reached $101 billion.

This money can only be used to net off one set of liabilities and the government needs to make a final decision – is it to be applied against the debt or the unfunded super? It can’t be both – that’s double counting.

John Howard also stressed yesterday that the proceeds of any sale by the Future Fund of its remaining 17% stake in Telstra would be retained in the fund. Yes, but what about the overall Future Fund earnings? They go back into Costello’s budget each year to inflate the surplus, before being transferred back to the Future Fund in yet another outrageous exercising in double counting.

If Costello and Howard really wanted to put these budget surpluses into a locked box they would simply deposit the money straight into the various Federal Government superannuation schemes where the $101 billion unfunded liability lies. This should have started in 1996, but instead Costello has overstated his budget surpluses by $31 billion as unfunded super liabilities were only $69 billion when he became Treasurer. If an additional $5 billion a year had gone in from 1996 we’d be fully funded now.

After all, the government was happy to deposit $4.7 billion straight into the Telstra and Australia Post super schemes in 2004 to make them fully funded. The 2004 Nick Minchin press release announcing this deal is very instructive and shows there was no need for this political ruse called the Future Fund.

The other great lie about the Future Fund is this notion that the money is somehow set aside to cover the future liabilities of ordinary Australians. It’s actually about past liabilities to retired public servants for services already rendered, such as my father-in-law who retired in 1992 but still gets a handy pension that is completely unfunded.

A smart wedge for Kevin Rudd would be to announce plans to change the name of the Future Fund to the Past Fund and then establish a real Future Fund that will actually build up a stockpile of assets to cover future aged pension payments for all Australians, not just the federal cardigan brigade.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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