While the Australian Government Future Fund has proven highly successful unfortunately the returns are swallowed by previous governments fiscally reckless decisions on treatment of Civil Servants perks and benefits of employment. However, the use of Sovereign Wealth funds has proven effective world wide in generating funds for Government services.
Manage Australia recommends the creation of the following funds to help cover Governments core service responsibility’s;
- Welfare – 2016/17 expenditure $158.61B*
- Health – 2016/17 expenditure $71.41B*
- Education – 2016/17 expenditure $33.67B*
- Defence – 2016/17 expenditure $27.16B*
Of course under the current trend of budgetary deficits ($16.6B in 2016/17), burgeoning debt, and debt repayments, this will be a very difficult target to achieve. Manage Australia accepts there will be non-core government service cuts required, as well as stringent budget control (see post here) to eliminate waste, and so called “middle class welfare” will need to be significantly scaled back.
The model for the funds will be the allocation of budget surpluses to funds listed in order. A Target of $20B surplus to be deposited in the funds, in order, per year up to:
- Welfare – $200B ($20B Years 1 to 10)
- Health – $100B ($20B Years 10 to 15)
- Education – $60B ($20B Years 15 to 18)
- Defence – $60B ($20B Years 18 to 21)
Interest from the funds will be distributed 50% to offset the budget and 50% to be reinvested into the fund.
To protect the funds from potential raiding from future governments we recommend a change to the constitution to protect the funds in perpetuity.
Manage Australia recognises this is a difficult policy to implement, with many self-interested bodies likely to object. However, we believe the general public will recognise the long term benefits of such a policy, despite the potential short term discomfort.