By Denis Bright
Arrival of Chinese New Year and Spring Festival in this Year of the Metal Rat brings new possibilities in the transition from this very challenging Year of the Earth Pig on 25 January 2019.
The progressive prescription for the Metal Rat must demand outstanding critical financial planning skills.
New policy directions are needed to assist Australian policymakers with a smooth transition from the excesses of market ideology and the vacuous planning goals which have taken our nation to the brink in bush-fire disasters and ignorance about the consequences of global warming.
Corporate dreams can of course continue as shown by this advertisement to promote Independent Living Units (ILUs) for seniors at Rothwell near Bayside Brisbane for less than $400,000 (Images from villages.com.au):
The challenge for Australian Progressives is to extend this commitment to a happy private life with a love for community development and social justice. The potential progressive support base in localities like Rothwell in the Petrie federal electorate has strayed from commitment to Labor’s Light on the Hill despite the electrified rail services to Rothwell and Redcliffe which were funded by the Gillard Government.
For seniors making lifestyle choices in the Bayside suburbs of Brisbane’s Petrie Federal Electorate, Scomo’s scare strategies worked well for the LNP at the 2019 elections with additional support from preferences allocated by One Nation with those few extra votes from the UAP and Fraser Anning’s Conservative Party. After preferences, the LNP vote increased by 4.65 per cent at the Rothwell booth to 60.73 per cent.
One sign of this social empathy came in a press release from the Queensland Government on 12 December 2019 to announce the formation of a Queensland Future Fund:
The Palaszczuk Government is committed to delivering more jobs in more industries, in addition to building the infrastructure and providing the services Queenslanders need today and in the future.
To support our current economic plan and, importantly, guarantee Queensland’s future economic success, the government will establish the Queensland Future Fund with initial funding of $5 billion… The Queensland Future Fund will be managed by our internationally renowned investment arm, Queensland Investment Corporation (QIC), who have been returning significant earnings back to the Queensland taxpayer for decades through the sound investment management of our fully funded Defined Benefits scheme….The Fund, similar to the NSW Generations Fund, will be established under an Act of the Queensland Parliament, and will require that funds can only be used to pay down debt.
With the QIC in charge of the financial rafters of the proposed Queensland Future Fund, this state’s new ventures into investment fund management will have a better start than the NSW Generations Fund.
As expected after the NSW sale of electricity distribution systems, the state LNP in NSW has not run out of assets to sell to top up its existing Generations Fund with its macro-commitment to debt reduction in the old Thatcherite traditions.
The NSW Softwood forests are the next public assets on the privatisation block (Anne Davies in The Guardian 27 December 2019). This article is best perused in its entirety as it exposes the desperation of the NSW Government to continue its privatisation agenda well beyond the proposed sale of the softwood plantations.
Unlike the canny Metal Rat in Year 2020 in the Chinese Zodiac, the NSW Generations Fund is of that gnawing variety which will eventually run out of assets to chew away in the rafters. Queensland might do better with the QIC professionally managing its proposed Future Fund.
In a middle-sized Australian economy, the proverbial digital rats in our financial rafters can and should be programmed to seek new sources of capital and technology to maintain and diversify the state public sector. Opportunities exist with a newer generation of public sector initiatives through Private Public Partnerships (PPPs) using capital invested by hedge funds particularly from overseas based corporations.
The state LNP in Queensland under Premier Campbell Newman regrettably embarked on a privatisation which the NSW Government is following today. Naturally, the operators at Transurban are all smiles about Premier Newman’s initiatives (Images from Transurban International):
All this political energy could have been used more productively to overcome a capital shortage problem in urban motorways. Premier Newman was so obsessed with the merits of privatised motorways that he overlooked signing up on the $6 billion cross-river rail project which was offered to Queensland by Prime Minister Rudd in the last days of the Labor Government. The funding provided by the incoming federal LNP Government after 2013 was zero.
Overseas corporate investors would welcome opportunities to invest in PPPs without the need for fixed rate investment returns as invited in the traditional government loans and bonds of old which attracted capital with interest rate returns well above bank rates.
Today’s canny digital financial rats would sniff opportunities from investment bonds offered by agencies like the NSW Generations Fund without the need for extended terms of investment or guaranteed returns. The stability of the Australian dollar would be enough reward for investors from corporate customers in countries where currencies are unstable. All future withdrawals would ultimately be at Australian currency rates.
Such changes would require amendments to the governance sections of the NSW Generations Funds Act 2018:
The Queensland Government is to be commended for its rejection of Premier Campbell Newman’s discredited privatisation agendas and as a late starter in the formation of a Future Fund, Queensland can easily improve on the NSW model. Having the QIC in control of assets held by the Future Fund is indeed a good start.
In the meantime, Queensland leaders should be guarded about the value of the NSW Generations Fund model in the context of a broader assessment of investment future funds in Scandinavia, Canada and Singapore and the roaring success of the QIC whose finances and investment achievements are available for perusal by all (https://www.qic.com.au/ ).
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