Monday, January 21, 2008

Privatise the Future Fund

The Rudd government wants to fight inflation and high interest rates by cutting government expenditure and thereby reducing demand. It wants a $18 billion surplus. Considering that the last few budgets have ended up around that level anyway it shouldn't be too difficult. Malcolm Turnbull reckons its mostly spin. As well the government wants to encourage savings and investment in infrastructure.

Those funds will end up in the Future Fund which already has over $60 Billion. Money which is being invested to eventually pay public servants superannuation. Thats right, the billions of dollars of our tax money which the government keeps through the surplus will end up paying for public servants retirement.

Governments need to raise enough tax to pay for the proper roles of government, not invest in the stock market. Even if public servants super obligations are large its better to cut taxes to encourage economic growth then to over tax people. I'm no economist, so lets assume there is a need to run surpluses to combat inflation and keep interest rates down. Is their a better alternative then the Future Fund?

I believe there is. Privatize the Future Fund. Theres enough money to give every man, woman and child in Australia $3000. Do it, give everybody a Personal Future Fund. For most people it would be linked to their superannuation, retired people get a free $3000 investment bond. Also give workers a flat $500 tax cut which would be added to the Fund. Any budget surplus can be credited into an individuals Fund by way of a tax cut. If the government ends up with an $18 billion dollar surplus it would mean Australia's 10 million workers would get $1800 credited into their fund not $500.

When the fund reaches $6000 anyone can withdraw savings from their fund in case of temporary unemployment, giving them the equivalent of six months dole. No need to see Centrelink, no means test either. After six months there would be a government benefit perhaps tied to a compulsory work for the dole. At retirement time any money in the fund would be transferred to your superannuation for you to enjoy.

Once the Personal Future Funds are accepted they can be expanded to replace other welfare payments, perhaps Medicare.

Personal Future Funds are not my idea, Peter Saunders has been promoting them for some time.

Personal Future Funds replace welfare with wealth fare and are the best way to reduce tax and substantially cut government spending as they address the largest budget items, our welfare and health bill. It should appeal to both parties and I wouldn't be surprised if Rudd implements a similar scheme. If he doesn't I hope the Liberals run with it.

1 comment:

  1. Only a leftie leader will be allowed to get away with encouraging people to save more and yet offer no new tax cuts. Given the still high petrol and grocery prices and recent news that we have the least affordable houses in the world, just what exactly are we supposed to be saving.