Two board appointments due at Future Fund

Treasurer Jim Chalmers is in talks with Future Fund governor, Peter Costello, about whether he will remain at the sovereign wealth fund for another term. 

Former treasurer Costello set up the $256-billion Future Fund in 2006, and has been its director since 2009. He was appointed as chairman in February 2014 for a five-year term, then reappointed in February 2019 – that term will end next year. 

In an interview with Patricia Karvelas at the ABC, Chalmers said he is in regular discussion with Costello about his role and that of other imminent appointments to the Future Fund Board of Guardians.

“[His term] comes up next year but we’re obviously engaged with him and more broadly as well. There are actually a couple of opportunities at the Future Fund when it comes to board appointments and the like to refresh the Future Fund. 

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“It’s an incredibly important institution, one that we value. I pay tribute to Peter Costello for setting it up as treasurer. It does help us meet some of the Commonwealth’s liabilities. It has been performing relatively well over time. That’s a good thing. We appreciate that. We’re grateful for that. 

“There’s a couple of board appointments that we need to make – one very soon, and one before the end of the year, and that will give us the opportunity to make sure we’ve got the right combination of skills on the fund’s board.”

The first one will be to replace former AMP director John Fraser, whose term will end in November after five years, while the second will likely be to replace John Poynton whose term will expire in February 2024.

As well as being the treasurer under Prime Minister John Howard from 1996 to 2007, Costello has also worked as chair of the OECD Ministerial Council and as a governor of the International Monetary Fund.

In August, Dimitri Burshtein from think tank the Centre for Independent Studies advocated the “economically responsible action” of liquidating the Future Fund to pay down the current $895 billion government debt, which is projected to reach some $923 billion at the end of the 2024 financial year, according to the most recent Commonwealth budget forecast.

However, independent modelling by WTW found that it would cost $200 billion to do so.

“Our analysis suggests that under a scenario whereby the Future Fund is liquidated to pay down government debt, this would come at a median cost (i.e. lost value-add) of around $200 billion over a decade with plausible outcomes around this ranging from approximately break-even at the fifth percentile to a cost of up to $500 billion at the 95th percentile,” WTW said.