PARLIAMENT HOUSE, CANBERRA: I rise to also speak against this motion. Despite this idea of a sovereign wealth fund gaining some support in influential circles, as the Member for Melbourne pointed out, a sovereign wealth fund should be firmly rejected. The fact that a sovereign wealth fund, at its essence, involves keeping taxes higher in order that the government invests in company shares, in itself, should be enough for most sensible people to firmly reject this idea. But if we look more closely at the evidence, then that should put it beyond any dispute.
To start with, if you want to have a sovereign wealth fund you must have a budget surplus and you have to have paid off your existing debt. In case you have not quite realised, we currently have a $37 billion deficit forecast for this financial year—although that will probably grow by the time we get to the end of it—and we have a net debt of $132 billion. Even if we get to the surplus, which the Labor government promises us next year, $1.5 billion, and similar amounts over the forward estimates, it will take 80 or 100 years before we pay back the debt which this government has accumulated. We have got to get the budget back into surplus and we have got to pay back the debt before we can even think about creating some new financial assets.
Mr Husic: When are you going to deliver it?
The DEPUTY SPEAKER (Mrs D’Ath): Allow the Member for Aston to be heard in silence!
Mr TUDGE: Of course, many people on the other side of the table—and certainly the Greens Member—would have us go into further debt in order to acquire shares in Procter and Gamble, and Mobil overseas. I find that a ridiculous proposition. I can understand why the Greens would advocate going into further debt so that the government can purchase shares overseas, but I cannot understand why normally sensible people like Ed Husic or Andrew Leigh would advocate such a proposition.
Even if no national debt existed, putting budget surpluses in a sovereign wealth fund is a poor idea. If we are honestly interested in intergenerational equity, which is one of the arguments being put forward for a sovereign wealth fund, what we should be doing is ensuring that our policy settings are geared toward maximising GDP. That is what former Treasury Secretary, Ted Evans said. And if we want to maximise GDP, which is the best thing that we can do for future generations? We need to lower taxes, we need to invest in productive infrastructure such as our ports, or completing the Melbourne ring road, rather than keeping taxes high in order to invest in foreign owned financial assets.
Of course, as Dr Leigh pointed out, there are times when we do need to increase savings, but now is not that time. We actually have quite a high savings rate in Australia—higher than the OECD average. Of course, if we did want to increase savings, then let us increase private savings rather than public savings. Private savings means that people can invest where they like, so it is good in principle, but it also means that you have the full diversity of the assets invested, so you end up with a better return than if the government were to invest in particular assets.
If we do go down this path of a wealth fund, as has been advocated by the Member for Melbourne, then we can soon have the government owning a sizeable proportion of a particular company’s share, which means it then has a conflict of interest when it is trying to regulate that company, because it ends up owning 10, 15 or 20 per cent of that company.
The Member for Melbourne also raised the issue of using a sovereign wealth fund to address our currency concerns. The Member for Mayo addressed this as well. Again, it is not something that a sovereign wealth fund could do unless it were an enormous fund. The Australian dollar is the fifth-most traded currency in the world—$4 trillion is traded in the Australian dollar every single day.
Member for Melbourne, do you honestly think that our sovereign wealth fund will be able to manipulate that currency with $50 billion or $100 billion? How big does this sovereign wealth fund have to be? It will be in Procter and Gamble, or Mobil or Philip Morris, or other overseas companies that we will invest our taxes. It is a ridiculous proposition. It is always superficially attractive to have a big pot of money for a rainy day but, at the end of the day, it involves trade-offs, and the trade-off in this case is holding taxes high in order to invest in foreign owned shares and foreign owned financial assets. (Time expired)