Future Fund primed to take greater role in net zero and housing development
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The news: The federal government is changing the Future Fund’s investment mandate and releasing a new statement of expectations for the fund.
The context: The government emphasised that the primary focus of the Future Fund would remain “maximising its returns” and that the changes would help “maximise its role in delivering for Australians in the future”. Its objective to ensure a benchmark return of 4% to 5% above CPI per annum over the long term has not been changed nor has the risk profile.
The new mandate will mean the fund must consider national priorities when making investment decisions, though this comes with the additional requirements that this be “where possible, appropriate and consistent with strong returns”. The national priorities include increasing residential housing supply, supporting the energy transition as part of the net zero transformation, and delivering improved infrastructure, including those focused on economic resilience and security.
The statement of expectations will aim to ensure the fund takes best practice approaches to governance, transparency and accountability.
The government has also committed not to make drawdowns from the fund until 2032-33 at the earliest. At this point, the fund is estimated to be worth $380 billion. Right now it is worth $230 billion.
There has been speculation about the role of the fund's future investments in the energy transition due to the appointment of former Net Zero Agency chair Greg Combet to the Future Fund as chair in June. Combet replaced Peter Costello, who advised the government in late-2023 he would not seek a third term as chair. The former treasurer had been with the fund for 14 years.
What they said: "The Australian economy faces major structural shifts including from the global net zero transformation, technological and demographic change, and global fragmentation," Treasurer Jim Chalmers and Finance Minister Katy Gallagher said in a joint release.
"The Future Fund has made clear it can play a prominent role in capitalising on these economic opportunities and supporting Australia’s prosperity.
"The fund’s primary focus will remain on maximising its returns, and at the same time, our changes will help it maximise its role in delivering for Australians in the future."
The source: Treasurer and Finance Minister Joint Media Release
