Future Fund likely to play the market By Shane Wright November 07, 2005 THE Federal Government's $140 billion Future Fund is set to sink most of its money into the Australian sharemarket.
Treasurer Peter Costello today effectively told the fund – which so far only has a chairman and no supporting legislation – that Australia was a good place in which to invest.
Former Commonwealth Bank chief executive David Murray will chair the fund, which is to pay for the superannuation of retired public servants.
The $140 billion will come from future budget surpluses and the proceeds from the full sale of Telstra, or shares in the telco if they are not directly put on the market.
Although an investment mandate has yet to be created for the fund, Mr Costello clearly signalled what he thought was the best place to invest – Australia.
"...the Australian investment climate is very, very good," Mr Costello said.
"You can get broad exposure in Australia, which is why I would think the bulk of it – but we wouldn't be stipulating that all of it – would be invested in Australia."
Legislation governing the fund is expected to be introduced into the parliament later this month and could become law by early December.
Mr Costello said the fund would not be able to take control of companies in which it invested.
"The idea is that it won't take control of companies, it will be an investor in the way that superannuation funds are investors," Mr Costello said Sky News.
"It will have a wide portfolio, it will seek a good return but it will be a stable fund."
Mr Costello said the board members for the Future Fund, who would be announced in coming weeks, would be called guardians because they were protecting the long-term interests of Australians.
"They are the guardians of the public who will have to guard this investment over a long period of time," he said.
"It is conceivable you could get a Labor government in the future and they would have to guard the fund against a Labor government's attempt to try and get the money and waste it."
ALP treasury spokesman Wayne Swan said the fund's board would have to be alert against possible pressure from the Nationals rather than the Labor Party.
"We can't have the Future Fund being plundered by the National Party as they've plundered the budget for years," he said.
"It has to be a locked box. We have to make the Future Fund a locked box."
