Funding for Australia's
future priorities

The Government is taking a strategic approach to the investment of budget surpluses by creating three new funds. These funds will meet capital shortages in infrastructure, education and health. Initially, the Government will invest $40 billion in these priorities, largely from the 2007‑08 and 2008‑09 surpluses.

Building Australia Fund (BAF)

Based on current estimates, the BAF will receive $20 billion over the next two years to fund shortfalls in national transport (roads, rails and ports) and broadband. The Communications Fund will be closed and its assets of $2.4 billion transferred to the BAF.

Education Investment Fund (EIF)

The Government will invest $5 billion to establish the EIF. The EIF will absorb and extend the Higher Education Endowment Fund, bringing total funding to around $11 billion. The EIF will fund capital expenditure in Australia's higher education institutions.

Health and Hospitals Fund (HHF)

The Government will allocate $10 billion to the HHF to finance the renewal and refurbishment of the nation's hospitals and to fund major medical research facilities and projects.

Fund structure and management

Each new fund will have its capital and earnings available for drawdown over

time after specific projects are identified. This substantially increases the financing available in coming years from these three funds.

The assets of each fund will be managed by the Future Fund and invested in line with a mandate provided by Government. The Future Fund will receive $3.9 billion to help it fully offset the Government's superannuation liability by 2020.

COAG Reform Fund

The Government will establish a COAG Reform Fund as a vehicle through which funds are transferred to the States from the BAF, EIF and HHF (for capital expenditure) or direct from the Budget (for recurrent expenditure on COAG reforms).