Queensland Future Fund Bill 2020
Plain English Summary
Overview
This bill establishes the Queensland Future Fund framework, starting with a Debt Retirement Fund that sets aside money exclusively for paying down State debt. It also legislates a 100% guarantee that the State will fully fund public sector defined benefit superannuation entitlements. The model is based on similar NSW legislation to satisfy credit rating agency requirements.
Who it affects
This primarily affects State finances and could benefit all Queenslanders through better debt management and potentially lower borrowing costs. Public sector workers with defined benefit superannuation receive an additional legal guarantee their entitlements will be fully funded.
Key changes
- Creates the Debt Retirement Fund, a ring-fenced account where money can only be used for reducing State debt or paying fund administration costs
- Investment returns earned by the fund must stay in the fund and cannot be diverted to other purposes
- Prescribed State assets contributed to the fund must remain government-owned in perpetuity and cannot be privatised
- Introduces special purpose accounts into State financial law, legally separate from normal departmental accounts
- Legislates a 100% guarantee that the State will hold enough assets to cover all accrued defined benefit superannuation liabilities, measured at least every three years
- Allows future Queensland Future Funds to be established by amending this legislation with new divisions
Bill Story
The journey of this bill through Parliament, including debate and recorded votes.
▸Introduced14 July 2020View Hansard
Vote on a motion
Vote on declaring the Queensland Future Fund Bill urgent and requiring the Economics and Governance Committee to report by 7 August 2020, significantly shortening the usual committee review period.
The motion was agreed to.
A formal vote on whether to accept a proposal — this could be the bill itself, an amendment, or another motion.
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Ayes (45)
Noes (38)
▸Committee14 July 2020View Hansard
Referred to Economics and Governance Committee
The Economics and Governance Committee examined the Queensland Future Fund Bill 2020 over a compressed timeframe after it was declared urgent, receiving two submissions and holding a public briefing with Queensland Treasury and a hearing with the Queensland Investment Corporation. The committee recommended the bill be passed, finding the legislative framework for establishing future funds and the Debt Retirement Fund to be sound. LNP members filed a dissenting report criticising the government's fiscal management and questioning the fund's effectiveness in addressing state debt.
Key findings (5)
- The bill establishes a legislative framework for Queensland Future Funds, modelled on the NSW Generations Funds Act 2018, with the first fund being the Debt Retirement Fund to reduce state debt.
- The Queensland Nurses and Midwives' Union supported the bill, while economist Gene Tunny argued the fund was unnecessary and could reduce government fiscal flexibility by locking up assets.
- Queensland Treasury confirmed that credit rating agencies had provided in-principle support to deduct the Debt Retirement Fund's value from the state's debt for credit assessments.
- The fund was to be seeded with at least $5 billion in assets including the Titles Registry, Cross River Rail precincts, and $1 billion from the Defined Benefit Scheme surplus, though due diligence on asset valuations had not been completed.
- The committee found no fundamental legislative principle issues and confirmed the bill was compatible with the Human Rights Act 2019.
Recommendations (1)
- The committee recommends the Queensland Future Fund Bill 2020 be passed.
▸Committee Report7 Aug 2020
Committee report tabled
Vote on a motion
Procedural vote on whether to treat the Queensland Future Fund Bill and Royalty Legislation Amendment Bill as cognate bills for their remaining stages, allowing them to be debated together in consideration in detail but with separate second and third reading votes.
The motion was agreed to.
A formal vote on whether to accept a proposal — this could be the bill itself, an amendment, or another motion.
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Ayes (47)
Noes (41)
▸Second Reading12 Aug 2020View Hansard
Vote on a motion
Division on an LNP amendment to freeze prescribed royalty rates for 10 years until 30 September 2030, which was defeated by the government majority.
The motion was rejected.
A formal vote on whether to accept a proposal — this could be the bill itself, an amendment, or another motion.
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Ayes (42)
Noes (49)
▸29 members spoke15 support1 oppose13 mixed
Supported the concept of a Future Fund but argued it is missing a great opportunity by not including a North Queensland component, run by a body like QIC, to unlock economic potential in the north.
“The Queensland Future Fund Bill is missing a great opportunity to introduce a North Queensland component to the Future Fund, with the support of the likes of QIRC.”— 2020-08-13View Hansard
As Treasurer, introduced and moved the bill establishing the Queensland Future Fund to manage debt by seeding it with public assets including the land titles registry, Cross River Rail precincts, and $1 billion from the defined benefit superannuation surplus.
“By placing strategic assets in the locked box of the Future Fund, we are protecting them from the risk of LNP privatisation while reducing net debt.”— 2020-08-12View Hansard
Spoke in support of both cognate bills, arguing the Queensland Future Fund will help maintain Queensland's credit rating and support sustainable long-term financial management, noting similar funds exist at Commonwealth and NSW levels.
“The Queensland Future Fund will play an important role in helping to maintain Queensland's credit rating and support sustainable long-term financial management.”— 2020-08-13View Hansard
Criticised the Future Fund as a distraction from Labor's financial mismanagement and questioned the valuation of assets, but stated the LNP would not oppose the bill. Raised concerns about raiding public servants' superannuation.
“The LNP will not oppose either bill but, as I have outlined in my contribution, the process from which both bills have been developed clearly shows that Labor is not working.”— 2020-08-12View Hansard
In reply, defended the bill extensively, thanked the LNP for supporting it, rebutted claims that it was a raid on public servants' superannuation, and emphasised that Queensland is the only jurisdiction with a fully funded defined benefit scheme.
“The entitlements of defined benefit members are not affected in any way by this bill and continue to be guaranteed under section 29 of the Superannuation (State Public Sector) Act.”— 2020-08-13View Hansard
As Economics and Governance Committee chair, supported the Future Fund as a mechanism to offset debt and protect public assets, noting the model was based on the NSW Generations Fund.
“This is about keeping public assets in public hands.”— 2020-08-12View Hansard
Criticised the Future Fund as creative accounting designed to avoid a credit rating downgrade before the election, questioning asset valuations and expressing concern for public servants' defined benefit scheme.
“The real long title of this bill should be 'How do we avoid a Standard & Poor's downgrade before an election bill'.”— 2020-08-12View Hansard
Supported the bill as smart fiscal management ensuring Queensland's assets work for Queenslanders while protecting them from privatisation.
“At the heart of these bills is smart fiscal management in the most tumultuous times for economies around the world.”— 2020-08-12View Hansard
As committee member, criticised the government's economic mismanagement and questioned the valuation of the titles registry and the risk to the defined benefit scheme surplus.
“My colleagues on this side of the House and I take issue with this government's mismanagement of the Queensland economy and the extraordinary rate at which our debt is growing.”— 2020-08-12View Hansard
Supported the Future Fund as a well-considered fiscal strategy to retire debt while protecting public assets from privatisation, noting Queensland's fully funded defined benefit scheme.
“It is important to note that our defined benefit scheme will remain in surplus and that Queensland will be the only state or territory in Australia with a fully funded defined benefit scheme.”— 2020-08-12View Hansard
Described the Future Fund as a bandaid over a massive economic wound caused by Labor's waste and poor administration, criticising the raids on public servants' superannuation and long service leave.
“This is a bandaid over a massive gash in the Queensland economy.”— 2020-08-12View Hansard
Supported the Future Fund as delivering future security and ensuring the state's defined benefit superannuation liabilities remain fully funded.
“The Queensland Future Fund will go a long way to delivering future security and will ensure that the state's defined benefit superannuation liabilities will remain fully funded.”— 2020-08-12View Hansard
Criticised the government for raiding $7.4 billion from public servants' entitlements and planning a further $1 billion raid on the defined benefit scheme despite its surplus halving.
“Over the past five years this government has ripped $7.4 billion from the future of Queenslanders who have gone above and beyond for our state, especially during the COVID pandemic.”— 2020-08-12View Hansard
Supported the Debt Retirement Fund as the best means to support the government's economic plan and guarantee Queensland's future economic success.
“For the establishment of a Debt Retirement Fund, our Queensland Future Fund is the best means to support our current economic plan and to guarantee Queensland's future economic success.”— 2020-08-12View Hansard
Called the Future Fund a political tool designed to trick the public, questioning the $4 billion titles registry valuation and criticising the raids on public servants' employment benefits.
“Let's be clear: this farcical proposal from the Palaszczuk Labor government is nothing more than a political tool designed to trick the Queensland public into believing they are doing something to manage Queensland's ballooning government debt.”— 2020-08-12View Hansard
Supported the bill as alleviating the debt burden on future generations while keeping public assets in Queenslanders' hands.
“The Future Fund will alleviate the debt burden on future generations of Queenslanders while ensuring our public assets are kept in Queenslanders' hands.”— 2020-08-12View Hansard
Criticised the Future Fund as laughable given the government's financial mismanagement and expressed concern about the defined benefit scheme's sustainability.
“Nothing about what this government does is planning for the future.”— 2020-08-12View Hansard
Supported the Future Fund's anti-privatisation protections and its role in the government's plan to reduce debt and recover from COVID-19.
“Queenslanders can rest easy knowing that there will be no benefit from privatising these strategic assets and that they will be protected by law.”— 2020-08-12View Hansard
Criticised the Future Fund as a distraction from Labor's poor financial management and the raids on public servants' superannuation and long service leave.
“Public servants should be concerned. Not only has Labor raided and mismanaged their hard-earned retirement savings; now the State Actuary's reporting requirements for a fund's surplus will be every three years.”— 2020-08-12View Hansard
Supported the Future Fund's anti-privatisation protections, contrasting it with the previous LNP government's cuts to services in her electorate.
“This will ensure that strategic assets such as commercial power or water infrastructure, which contribute to the Debt Retirement Fund, will be put into a 'locked box' to protect them from being privatised by the LNP.”— 2020-08-12View Hansard
Criticised the Future Fund as a distraction from Labor's financial mismanagement, comparing the government to a predator inside a ring fence with the public servants' savings.
“The Queensland Future Fund is no ring fence against a Labor government—which is the predator.”— 2020-08-12View Hansard
Supported the Debt Retirement Fund as providing a mechanism for credit rating agencies to recognise the state's fully funded defined benefit scheme surplus.
“At the moment, these funds are not taken into account which means we are not actually receiving the full benefit of us being the only state to have a fully funded scheme.”— 2020-08-12View Hansard
Criticised the Future Fund as insufficient given the enormous concessions still flowing to the mining industry, arguing the government should be raising far more in royalties to fund COVID-19 recovery.
“If we had fair royalty rates over the last four years, this government would have at least an extra $55 billion for hospitals, schools and public infrastructure—11 times the size of the Future Fund's seed funds.”— 2020-08-12View Hansard
Criticised the government's financial mismanagement and lack of economic leadership, supporting the LNP's plan for a 10-year royalty guarantee and a budget within 100 days.
“Queenslanders are now saddled with a debt skyrocketing above Paul Keating's debt—to $100 billion.”— 2020-08-12View Hansard
As the former treasurer who originally proposed the Future Fund, supported the legislation as future-focused reform in the tradition of Labor's establishment of the defined benefit scheme.
“The Future Fund not only will be an incredibly important part of our debt payment strategy going forward but also is a mechanism that will be recognised by the ratings agencies as an offset for our increasing debt levels.”— 2020-08-12View Hansard
Called the Future Fund a hoax, comparing it unfavourably to the failed Queensland Future Growth Fund under the Beattie government, and argued it does not pay down any debt.
“The Queensland Future Fund Bill is a hoax. It is a hoax in the same way as the Queensland Future Growth Fund of the Beattie government was a hoax.”— 2020-08-12View Hansard
Supported the Debt Retirement Fund and the anti-privatisation provisions, noting the Newman government increased debt by $15.2 billion and sold $10.7 billion in assets.
“The Newman government increased debt by $15.2 billion.”— 2020-08-12View Hansard
Called the Future Fund 'creative accounting' and a billion dollar raid on public servants' superannuation, arguing Labor has no fiscal strategy for Queensland.
“This bill is nothing but a billion dollar raid of the superannuation of Queensland public servants to try to convince voters that Labor is actually doing something about this state's ballooning debt.”— 2020-08-12View Hansard
Supported the Debt Retirement Fund as ensuring Queensland's strong balance sheet receives the recognition it deserves from credit rating agencies.
“This legislation ensures that Queensland's strong balance sheet receives the recognition that it has long deserved.”— 2020-08-12View Hansard
▸In Detail13 Aug 2020View Hansard
▸1 procedural vote
Vote to grant leave
The LNP opposition (Mr Mander) sought leave to move an amendment to the Royalty Legislation Amendment Bill outside the long title. The ALP government and Greens voted to deny leave 46-39, blocking the amendment.
Permission was refused.
A vote on whether to grant permission — for example, to introduce an amendment or vary normal procedure.