The Political Economy of Australia’s Future Fund – The Political Dimension
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In September 2004, the then Treasurer Peter Costello announced the creation of a new state-owned investment fund designed to ‘to meet the long-term costs associated with Australia’s ageing population’.1 The Future Fund (FF) was formally created in May 2006 and as of late 2009 managed assets of A$85 billion and thus represents a significant development in Australian budget politics and management (Future Fund 2009). This chapter builds on the economic analysis presented by John Freebairn in Chapter 7 by exploring the political circumstances that led to the FF’s creation as well as the economic and political consequences of its short history. The chapter argues that despite the FF’s distinctive rationale and structure, many of the debates concerning the governance of ‘conventional’ sovereign wealth funds (SWFs) are also relevant to the political economy of Australia’s FF. The central issues here are whether the creation of a state-run investment fund will enhance long-term national economic growth and the extent to which the fund can be used for political purposes.
KeywordsPolitical Economy Pension Fund Australian Government International Working Group Budget Surplus
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