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As Labor and the Greens play ‘double-dissolution chicken’ over the Housing Affordability Future Fund (HAFF), it’s worth noting there’s already a HAFF-like thing in existence. Michael West reports.

Will Albo pull a double dissolution? Probably not, but it costs Labor nothing to get a double dissolution trigger in place and make the Greens and cross-benchers very nervous. Who will retain their seats in the event of a sudden election? It’s a lottery, political brinksmanship.

The fight is over housing. The Greens are blocking Labor’s Housing Affordability Future Fund (HAFF) which is a $10b loan for the Future Fund to manage and any proceeds on investment made by the Future Fund money managers will go to public housing.

The Greens say its too mean and too tricky; it does not address the severity of Australia’s housing problem. Labor says ‘the perfect is the enemy of the good’. The HAFF will deliver houses; do you want houses or not? It is worth noting that there is a similar fund in place now, and its performance is a guide to how the HAFF will behave.

We are referring to the Medical Research Future Fund (MRFF). Just like the HAFF, its a bunch of public money given to the Future Fund to manage and the proceeds are spent on medical research. The difference is the MRFF is given the money and the HAFF is to be lent the money.

In both cases, the money to be spent on medical research or housing depends on the financial market returns of the money managers. If there are no returns, there is nothing to invest, although as markets go up over time returns are assured. The question is how much?

In the case of the MRFF, some $400m is swallowed up in fees for money managers. 

Look through costs, wot?

The latest accounts show it managed $21.6 billion as at 30 June 2022. The total cost structure at the time was 1.96%. Although the base management fee is low at 0.2%, the total so-called ‘Look Through Costs’ – which are basically the fees the Future Fund pays to external fund managers, including performance fees – mean last year the costs were $423m (1.96% on $21.6b under management).

That’s a hefty cost. Also, the government had to top up the MRFF by $172.5m in 2020. Performance each year is by no means assured. Let’s say a similar fee structure was in place, the HAFF might be paying some $200m in fees. Assuming a 5% return, that would put a large dent in the putative $500m return.

Houses would nonetheless be built, as Labor says; it’s just a matter of how many. The Future Fund has returned 7.8% per year since it started. But in 2021-22 it lost 1.2%. But then again in the prior year it delivered 22.2%.

Notwithstanding the political heat, the bitchy rhetoric and the threats of double dissolution, this is all about the Senate just doing its job. This debate is what politicians are paid for and they are representing their electors with vigour.

Housing Crisis: forsake the Future Fund Albo, you’ve already found a better build


Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.

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