More from John Fraser in the senate from the AFR:
As revealed by The Australian Financial Review last month, expected surpluses next decade have been significantly boosted by the inclusion from 2020-21 of earnings from the $117 billion fund.
In a fiery exchange in estimates on Monday, Mr Fraser indicated he was not responsible for the change.
…Mr Fraser said last week’s capex survey for the first quarter showed there was still some caution about corporate spending plans for 2015-16.
…Mr Fraser noted that the budget had been based on an assumption that the iron ore price would average US$48 a tonne, which was the four-week average of prices on the day when the forecasts were struck.
He said prices had been somewhat higher since and if sustained, would create some “upside risks” to nominal income forecasts.
The Future Fund fiddle is obvious political interference. In my view it should not even be included in the calculation used by rating agencies for net debt given because it is earmarked to fund future pensions for public servants. That’s hardly an unencumbered asset. Recording it as future revenue is the same.
As for capex, Treasury has stuffed its forecasts badly as we know and the upside risk to iron ore at $54 (Treasury uses FOB, add $6 for benchmark) over 2015/16 is the same as it is for me to win Lotto. The only risk worth discussing is the downside at $40 average, then $30 average the year after.
