Dave Richardson
Senior Research Fellow

According to the Financial Review the Coalition will set up two new funds, a Future Generation Fund and a Regional Australia Future Fund. These will be financed by “80 per cent of positive windfall commodity receipts each year”.

Now just what that means is a bit confused. But it appears to mean to be the difference between what the Budget estimates company tax revenue from mining companies will be will be and what it ends up being.

The amounts are large but not that large – the Budget Papers show that every US$10 under-estimate of the iron ore price gives a A$0.4 billion revenue windfall in the first year, $0.5 billion in years 2 and 3 and then $2.1 billion in year 4. Significant but not a big deal in a budget with expected tax revenue of almost $700 million in 2025-26 and over that in subsequent years.

The Coalition says it wants to return the deficit to surplus and then put money in the new funds. The sorts of money we are talking about are not going to go very far towards the projected deficits of $42 billion in 2025-26 and a bit under $40 billion in subsequent years. So the funds are going to have to wait a long time before there is anything in them. And longer still before the funds make an income that can be distributed.

Angus Taylor said the wants to finance stronger regional communities. If so it’s a bit of a joke making the regions wait until the budget is in surplus. If stronger regional communities are a genuine priority they should be funded as a matter of priority.

Remember Australia’s projected deficits (max 1.5% GDP) are piddling compared with other OECD countries such as the US 6.6%, Britain 5.5% and the Euro area 3.3%.