Imagine if next week you predicted that you would earn 20% less than your actual salary. When you earned your actual salary, would you have just earned a windfall!? No, but that is what the LNP is saying would be the case with their new funds announced today.

Today, the Liberal and National Party announced that they will set up two news funds that will be part of the Future Fund. They are the “Future Generations Fund and the Regional Australia Future Fund”. It all sounds quite nice – who wouldn’t love future generations and regional Australia! Alas, as with the ALP government’s Housing Australia Future Fund (HAFF) the best parts of these funds are their names.

These funds, like the HAFF, use meaningless figures to make them sound big, but are purely set up to put off doing things.

Rather than spend money on vital infrastructure, health care, and education services now, these funds instead put money into an account and will only spend money once the funds earn a return on their investments.

But by the time these funds have made a return, the infrastructure needs will be much greater, and Australians will have gone without vital improvements in health, education and other services.

Even worse, both of these funds proposed by the Coalition are based on smoke and mirrors. They propose to funnel revenue windfalls from commodity receipts into the funds. But it is important to note that these are not funds based on the taxation of windfall profits by mining companies, as is the case with the Norway sovereign wealth fund.

This “windfall” revenue that will go into the new funds is just the difference between what the Treasury predicts the government will collect in tax from mining companies and what is actually collected in tax. In essence, the windfall is just the error in the budget. If Treasury were good at these predictions, then there would be no windfalls.

But the Treasury always get the prediction wrong. Why? Because they deliberately predict low commodity prices. We can see this in each budget’s prediction for Australia’s terms of trade.

The terms of trade is a measure of our export and import prices, which are dominated by commodity prices. Every budget always predicts a drop in commodity prices, which rarely happens. When that prediction is wrong, the government gets to pretend this is a windfall gain.

They do this so the budget will always come in with more revenue than predicted. Treasurers would rather be surprised with extra revenue than disappointed with less revenue. However, this extra revenue is not an unexpected windfall gain; instead, it is a deliberate strategy to underestimate revenue.

This “surprise” money is what the Coalition plans to put into these funds. This means that the Coalition could put more money into the fund by predicting an even larger drop in commodity prices. Or conversely, it could put less into the fund by predicting higher commodity prices.

These “windfalls” are not based on the profit margins of mining companies – if the budget predicted massive profits and that came true, then by the Coalition’s definition, there would be no windfall!

Our research shows Australia currently gives away more than half the gas we export for free, with zero royalties paid on 56 per cent of all the gas we sell overseas. No LNG project, despite making windfall profits due to the massive spike in gas prices due to the Russian invasion of Ukraine, has paid one cent of tax in the PRRT, which is supposed to be Australia’s windfall profits tax on gas. Instead, it is a tax lawyers’ picnic that is never paid.

The government should tax the actual windfall profits of mining and gas companies. That would produce real revenue gains.

This scheme is just nonsense predictions dressed up as responsible budgeting.