CEDA’s sovereign wealth fund call assumes budget surplus we don’t have

Given that Australia hasn’t run a budget surplus since 2007-08, and it appears likely the current Treasurer Wayne Swan won’t ever deliver one (Swan resolute as budget bleeds its forecast surplus), CEDA’s call for a sovereign wealth fund is pointless (see coverage in the Australian).

If the Government is eventually in the position where it has surplus cash to invest, it would be better off either repaying its $100 billion+ debt or cutting taxes on business, which would very directly assist businesses that are struggling in the patchwork economy. If, however, the Government starts running embarrassingly large surpluses, then it could always park money in the Future Fund.

In my view, CEDA should call for cuts in wasteful government spending (e.g. industry assistance), which would create fiscal space for tax cuts, rather than for a sovereign wealth fund that assumes a budget surplus we don’t currently have.

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