May I respond to at least one theme in Stephen Mayne’s commentary on my tilt for Labor Melbourne preselection in yesterday’s edition.
Mayne writes that I am “presenting as a radical lefty for Labor preselection to take on Greens’ incumbent Adam Bandt in the ultra-progressive federal seat of Melbourne next year”.
I have no qualms with that view.
He also writes I am “espousing radical policies such as liquidate the Future Fund”.
But he didn’t mention I also loathe the so-called independence of the Reserve Bank. I’d prefer cabinet to set macroeconomic policy settings, as was once the case. (Equally, I view calls for some form of “fiscal policy board” as a dreadful and anti-democratic option.)
I may be the only person in the country scrutinising the Future Fund with a view to winding it up, but I am serious about the merit of this as a policy option. Let me explain.
The Future Fund was established under false pretences from the start and can be spent now.
The over taxation of Australian incomes from the late Howard Costello era — a stretch of surplus years in 1986, 1987 and 1988 — is a blight on the country and one with an easy fix. Telstra privatisation proceeds also sit in the fund, rather than being reinvested for the people whose asset was sold.
There never was any case for a Future Fund. The selected rationale was funding federal payroll pensions — an argument shown in the most recent intergenerational report to be a crock.
Yes, there is a pension spending bubble, a big one. But this is a dimple on the ballooning basketball that is Australia’s aged-care spending surge.
There is no Future Fund for that dilemma other than the future labour of the working population, ideally working for better incomes. Future care costs will be funded from current taxation, the same flow that ensures pensions are paid now.
The key to engaging with this surge in government outlays is to support an incomes surge that can tolerate the higher taxation that is likely.
The spending offset by Future Fund drawdowns will be in the order of 0.1 per cent of GDP, the intergenerational report shows. This is so inconsequential it may be said the Future Fund solves no problem.
So, spend it now — meaning genuinely invest it. Kinders, schools, unis, health services. I propose to support human capital improvement through the focused liquidation of the Future Fund.
With $109 billion in the fund at the end of 2014, winding it up works out to be a release of $723 million per electorate. A money pot not only alluring — but available.
So, get investing.