Chairman’s Report
Chairman of the Future Fund Board of Guardians, the Hon Peter Costello AC, discusses the FY23 investment climate and the performance of the Future Fund, and talks about the priorities for the Board looking ahead.
We closed the year with another solid performance, and it's been done in a difficult investment climate. It's been a difficult environment because interest rates have been rising sharply and they've been rising fast, and they've been rising in response to high inflation.
So we've got to get through this period, normalise interest rates and hopefully, we'll see a growing economy and growing asset prices again. The other side of this also, is that there are a lot of tensions in the world, and as a result of that, there've been a lot of impediments to investment. The globalised world, which is so important to allow free flowing investment, has narrowed and become more restrictive. And countries are putting up trade barriers and making things more difficult.
The vision [for the Future Fund] was that we were going to strengthen the Commonwealth balance sheet and prepare for the ageing of the population, which is now upon us. The Future Fund was set up to start provisioning for some of those pressures, and it's done a great job. But the pressures are only going to get worse. So we're only going to have to do better.
The Future Fund is Australia’s, that is the Commonwealth of Australia's, largest financial asset. The Commonwealth of Australia's got a lot of debt, it's got a lot of unfunded superannuation and disablement liabilities. And the only asset that it's got to set off against that is the Future Fund. So, the Future Fund strengthens the balance sheet. It helps with our credit rating, and ultimately will help with the liabilities that the Commonwealth will have to pay. So, it's integral. It's central. It's very, very important for the Commonwealth Government. And for Australia's future.
I'd like to see The Future Fund go for several decades. I think it's been well-established. It's come through a growth period. Now it's got to get ready for the long haul.
The Future Fund is more important than ever. It was important when it was set up, but as decades have gone by, the need has become greater. It's going to be more needed than ever before.
