The Labor government’s plan to adjust the Future Fund’s mandate to prioritise investments in housing, renewable energy, and cybersecurity may seem noble, but it is a deeply flawed move. Established by the Liberal Coalition government in 2006 under Treasurer Peter Costello, the Future Fund was designed to meet the unfunded superannuation liabilities of public servants. It is not, nor was it ever intended to be, a political piggy bank for governments to fund pet projects.
The strength of the Future Fund lies in its independence. Managed by a board of guardians rather than directors, its sole focus has been to maximise returns while operating with a prudent risk profile. This approach has served Australia exceptionally well, delivering a staggering 11.9% return last year, ensuring future taxpayers are not burdened by past commitments. Labor’s plan threatens to politicise this success, prioritising political objectives over sound financial stewardship.
Federal Treasuer Jim Chalmers claims these changes will not compromise the fund’s primary objective of maximising returns. However, by directing the fund to align investments with “national priorities,” the government risks undermining its independence. Fund managers should select investments based on risk and return, not the policy whims of the government of the day.
Even if investments in housing, renewable energy, and cybersecurity are theoretically profitable, they come with unique risk and return profiles. By pushing the fund in these directions, the government creates a precedent for future interference. Imagine a scenario where a future administration demands divestment from industries it politically opposes or redirects funds to poorly planned projects. The result? A loss of trust in Australia’s sovereign wealth management and its hard-earned reputation.
Labor has framed this intervention as an opportunity to address housing shortages and infrastructure needs. These are critical issues, but they should be tackled through the budget, not by raiding a fund set aside for long-term obligations. If these investments were genuinely high return, the Future Fund would already be pursuing them as it has done with selected renewable projects like Tilt Renewables and infrastructure investments such as Melbourne Airport’s third runway.
Labor’s proposal also undermines nearly two decades of bipartisan consensus that has protected the Future Fund. Politicising its mandate could erode the independence that has been key to its success. Jane Hume, Shadow Minister for Finance, rightly points out that the fund was created to ensure taxpayers would not have to bear the cost of unfunded liabilities. Changing its mandate now is not modernisation but rather an ideologically driven gamble.
The Future Fund was built to serve all Australians, not the priorities of any one government. Labor’s plan compromises its independence, integrity, and long-term mission. If Australia is to remain a model of prudent fiscal management, the Future Fund must be left untouched. This is not Labor’s money; it belongs to the future of all Australians.
