Australia's Wealth Fund Seeks Changes to Investment Mandate

Australia's sovereign wealth fund, known as the Future Fund, has requested modifications to the proposed investment mandate that was announced by the government. The details of this request were revealed through documents obtained via a Freedom of Information request.

Government's New Mandate

In November, the Australian government introduced a new mandate for the Future Fund, which manages approximately A$230 billion, or about $143 billion. The proposed mandate directed the fund to take into account national priorities when making investment decisions. These priorities included essential areas such as clean energy, housing, and infrastructure projects.

Future Fund's Position

The documents, which were heavily redacted, suggest that consultations took place involving key figures such as Greg Combet, who chairs the Future Fund Board of Guardians, and Treasury Secretary Steven Kennedy. According to a briefing note dated August 21, the Future Fund expressed a preference for the wording of the mandate to be softened. Instead of requiring the Board to consider national priorities, they suggested that the language should state that the Board should consider these priorities.

The final version of the mandate, released by the government, confirmed that the Future Fund must consider Australia’s national priorities in its investment decisions whenever possible, provided it does not compromise the goal of achieving strong returns. The benchmark rate of return for the Future Fund remained unchanged, set at an expected 4% to 5% above inflation.

Concerns Over Alignment

Furthermore, the Future Fund indicated a preference for aligning its national priorities with specific sectors rather than following the broader initiatives pushed by the government, namely the 'Future Made in Australia' plan. This plan aims to promote local manufacturing and attract investments in key sectors such as clean energy.

As the Future Fund continues to navigate the complexities of its mandate, the expectations and responsibilities placed upon it reflect the broader goals of the Australian government in fostering economic stability and promoting sustainable development.

Australia, Wealth, Fund