New bucket for the interest on surplus

According to The Australian newspaper, the Federal Government is be preparing to unveil an innovative plan in the May budget to invest likely future surpluses for the specific benefit of Australia’s infrastructure.

Surpluses would be given to the government existing wealth fund, the Future Fund, to manage, but investment earnings would be directed to infrastructure projects overseen by a new entity called the Building Australia Fund.

The fund is expected to receive the lion’s share of this year’s surplus, which economists expect to reach at least $15 billion.

"We are committed to delivering on the Building Australia Fund because Australia desperately needs more investment in productive capacity, and particularly in infrastructure," Mr Tanner is reported as saying.

When Labor first promised the fund in 2005, it had aimed to divert earnings from the Future Fund towards infrastructure.

However, the Future Fund requires only a small additional investment before it has enough money to cover its original goal of financing public servant superannuation. The government is now expected to model the fund on the Howard government’s Higher Education Endowment Fund, whose assets are managed by the Future Fund.

The Government’s new statutory authority, Infrastructure Australia, chaired by Rod Eddington, will guide the projects that are supported. The infrastructure industry expects the fund to focus on projects that do not work as public-private partnerships. Industry advocates hope this might include big projects such as a new inland rail route between Melbourne and Brisbane.


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