Peter Costello and John Howard reckon it economic vandalism to divert $2.7 billion of Telstra shares into a fast broadband network for the nation. Whilst this is an eminently defensible policy by Labor, the idea of using the Future Fund for other infrastructure assets is a lot more controversial.

Then again, in straight economic terms, I’m pretty nervous about new Future Fund CEO Paul Costello attempting to invest $40 billion of our taxpayer cash right at the top of a capital markets bubble.

Fully funding super is a no brainer. It’s against the law for any private employer not to do it and as a matter of fiscal responsibility and inter-generational equity, liabilities should be funded when they are incurred.

If the Howard Government really wanted a locked box, they should have deposited its surplus cash into the various unfunded federal super schemes.

For instance, take a look at the 2005-06 annual report for the Military Superannuation and Benefits Scheme which has 113,448 members. This scheme has $2.3 billion in assets and is chaired by Costello’s mate Charles Kiefel, who used to run the ANZ Investment bank. ASX and Babcock & Brown director Michael Browne is also a trustee.

Military Super achieved an impressive gross return of almost 20% in 2005-06 and its infrastructure assets yielded 23.3%. However, Military Super also had an unfunded liability of $6.6 billion when it was last measured two years ago.

There’s a simple solution. The Future Fund should transfer $6.6 billion of its cash to Military Super. The idea that the brave men and women of the defence force don’t have fully funded super is an affront during this age of terror. Our boys in Iraq are not provided for!

And once deposited, there is no way a Rudd Government would dare take the money back out of Military Super to fund some infrastructure spending binge.

Having fully funded Military Super, the Howard Government could then turn to the various other unfunded schemes. For instance, why does the Reserve Bank have a fully funded scheme yet the poor old ABC is just lumped in with the great mass of unfunded public servants?

People like Kerry O’Brien and Tony Jones deserve fully funded super like the rest of us, yet neither side of politics is talking about actually putting money into a fund to specifically provide for them. They should.

Peter Fray

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Editor-in-chief of Crikey

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