Economy

SYDNEY (Reuters) – The mandate for Australia’s sovereign wealth fund will grow to include domestic housing, energy and infrastructure in a major revamp unveiled on Wednesday that nudges the A$230 billion ($150 billion) fund towards government priorities.The changes add new mandates for investments that build more housing and infrastructure, or speed the carbon emission transition to net zero as long as they are “possible, appropriate and consistent with strong returns.” The fund’s return target will not change.”This will mean more investment where we need it most but not at the expense of returns,” Treasurer Jim Chalmers said in a statement.A domestic emphasis is common among sovereign wealth funds. Saudi Arabia’s Public Investment Fund increasingly invests at home, while Singapore’s state-owned investor Temasek holds a quarter of its assets domestically. However, months before an election, the decision is likely to draw criticism from opponents who see the changes as an extension of the centre-left Labor government’s political priorities.The former chairman of the fund, a long-time treasurer in previous conservative governments, warned last year against spending the fund on political projects.Chalmers said the fund’s board had been consulted on the changes.The Future Fund was set up in 2006 with proceeds from the sale of state telco Telstra (OTC:TLGPY) to cover unfunded pension liabilities and bolster the government’s balance sheet.Chalmers pledged to delay drawing on the fund until at least 2033 so it has more time to grow. By then the government expects it to hit A$380 billion in assets.($1 = 1.5326 Australian dollars) More

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Le Pen’s warning shot comes as she faces a major potential setback, with prosecutors seeking an obligatory five-year ban from public office for her alleged role in embezzling EU funds. She denies the allegations. If judges convict Le Pen and uphold the sought sentence, she would be barred from running in the 2027 presidential election which many believe she could win.Some analysts have suggested Le Pen’s legal woes could accelerate her plans to bring down the government. “We will not accept that the purchasing power of the French be once again hit. This is a red line and if this red line is crossed, we will vote no-confidence,” Le Pen told RTL radio.Faced with a starkly divided parliament, Barnier has suggested using a tough measure – invoking article 49.3 of the constitution – to ram the budget bill through the legislature without a vote. That would inevitably trigger a no-confidence vote that the RN and the left could use to bring down the government.Le Pen also said on Wednesday the RN opposed increasing the tax burden on households, entrepreneurs or pensioners and that so far these demands were not reflected in the upcoming budget.Le Pen has made cost-of-living concerns a central plank of her electoral offer, which has traditionally focused on anti-immigrant and security issues. Inflation fears also helped propel U.S. President-elect Donald Trump to victory over Kamala Harris in this month’s U.S. election.When asked about Le Pen’s threat, Foreign Minister Jean-Noel Barrot told CNews television: “Those who would topple the government will deprive the country of a budget and create disorder and chaos.” Le Pen also said on Wednesday the RN would vote for far-left LFI party’s proposal to drop President Emmanuel Macron’s pension reform. Left-wing lawmakers in the lower house have said they would trigger a vote of no-confidence against the government.To survive, Barnier needs the RN to abstain from the vote. While some RN lawmakers have already brandished the threat of not cooperating, its head Jordan Bardella has said the decision will depend on whether the final cut of the budget reflects their demands. More

DUBLIN (Reuters) – Parties vying to lead the next Irish government are luring voters with ambitious spending plans, banking on a continued boom in foreign multinational corporate tax revenues that could be threatened by the incoming U.S. administration.With a strong economy, a population set to rise by up to 8% by 2030 and infrastructure provision 25% lower than many other high-income European countries, whichever party wins the Nov. 29 election will need to spend more just to keep up.However the scale of the commitments and potential risks have become a theme of the campaign. An Irish Times headline on Sunday suggested “someone should take Simon Harris’s phone away before he bankrupts the country”, noting the prime minister’s nightly unveiling of “all sorts of goodies” on Instagram.”The U.S. election has appreciably changed the risk and we seem to be going ahead as if nothing has changed but I think something very significant has changed,” said Professor John McHale, head of economics at the University of Galway.The risk centres around the unique exposure of Ireland’s low-tax business model to the United States. Ireland’s recent big budget surpluses have been driven by a near seven-fold increase in corporate tax receipts over the last decade, mainly paid by U.S. firms.PRECARIOUS POSITIONIf enacted, President-elect Donald Trump’s pledge to slash corporate tax rates to Irish levels, incentivise industries to bring production back to the U.S and impose trade tariffs could jeopardise the continued growth in corporate tax receipts forecast by the Irish finance ministry.Harris’ Fine Gael and outgoing coalition partner Fianna Fail – the favourites to lead the next government – have promised to hike spending by 5.5% to 7% a year to 2030, cut taxes and invest the remaining surplus in the country’s sovereign wealth fund.The main opposition Sinn Fein party favours a higher level of spending growth and putting less money aside.The plans suggest recent “fiscal slippage” will continue after the election, Goodbody Chief Economist Dermot O’Leary said, calling on parties instead to stick with a fiscal rule introduced in 2021 to cap spending increases at 5% a year.The outgoing government broke its own rule in three of the four budgets since its introduction.Not everyone agrees that the international risks should spell more caution, given Ireland’s improved financial balance sheet and debt dynamics.”We have a good hand to deal at the moment and I think that’s reflected in some of the optimism you’re seeing in the policies,” said Kevin Timoney, chief economist at Davy Stockbrokers.”We have this big infrastructure gap and we have money to try close it and that can help support the medium term picture. We don’t want to be laggards in some of these areas that are strategically important for the economy.” More

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