Outline

Background

The Australian Government’s first Intergenerational Report highlighted that if Government policies are not adjusted, the current generation of taxpayers is likely to impose a higher tax burden on the next generation in order to pay for critical Government services, such as health and aged care.

In addition to these pressures the Budget will be facing pressure from the Australian Government’s unfunded superannuation liability, which is currently the largest quantifiable liability on the Government’s Balance Sheet.  As at May 2007, this liability stood at around $103 billion and it is expected to grow to around $148 billion by 2020.

Currently the unfunded component of the Australian Government’s superannuation benefit payments is paid from the budget, on a pay as you go basis.  The Government is currently paying out approximately $4.5 billion a year in gross superannuation benefit payments. If this were to continue, this figure would grow over the years at a time when the Budget will already be facing pressure from an ageing population.

In response to these pressures, the Australian Government announced in the 2005-06 Budget that it would create the Future Fund, with the defined purpose of accumulating sufficient financial assets to offset the Australian Government’s unfunded superannuation liability by 2020.

In May 2007 the Australian Government announced its intention of creating the Higher Education Endowment Fund (HEEF). The objective of the HEEF is to support capital expenditure and research facilities in Australian universities. This support will be provided by the dividends of the capital invested in the HEEF, not the capital investments. 

History

 

10 May 2005   The Government details plans for the Future Fund in the 2005-06 Budget.
9 November 2005 Mr David Murray is appointed Chair of the Future Fund Board of Guardians.
23 March 2006 The Future Fund Act 2006 receives Royal Assent.
30 March 2006 Members of the Board of Guardians are announced.
5 May 2006 The Government transfers $18 billion seed capital to the Fund.
25 August 2006 Mr Paul Costello announced as General Manager.
22 January 2007 Government transfers $18.639 billion to the Future Fund.
16 February 2007 Government transfers $3.638 billion from the 05-06 budget surplus to the Future Fund.
28 February 2007 Government transfers 2.1 billion Telstra shares, (worth $8.966 billion at transfer) following the Telstra 3 sale.
9 May 2007 Government announces plans for the Higher Education Endowment Fund.
24 August 2007 Government transfers $7 billion from the 06-07 budget surplus to the Future Fund.
24 September 2007 The Higher Education Endowment Fund Act 2007 receives Royal Assent.
22 October 2007 Government transfers initial $3 billion to the Higher Education Endowment Fund.
22 January 2008 Government transfers a further $3 billion to the Higher Education Endowment Fund.

 

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