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Future Fund
The Future Fund is an independently managed sovereign wealth fund established in 2006 to strengthen the Australian Government's long-term financial position by making provision for unfunded superannuation liabilities for public servants that will become payable during a period when an ageing population is likely to place significant pressure on the Commonwealth's finances.
The legislation establishing the Future Fund describes its main object as being 'to strengthen the Commonwealth's long-term financial position'. While legislation permits withdrawals from the fund from 1 July 2020, the government indicated in 2017 it intends to allow the fund to continue to accumulate until at least 2026/27 before making withdrawals. The Investment Mandate for the Future Fund is to target a benchmark return of at least the Consumer Price Index + 4 to 5 per cent per annum over the long term, while taking an acceptable but not excessive level of risk.
The Future Fund Board is currently also responsible for six other Australian sovereign wealth funds:
The Education Investment Fund, a fund to provide capital investment in higher education and vocational education and training valued at A$3.9 billion in 2018, was ended by 2019 legislation, which redirected the money to natural disaster relief.
Investment of the Future Fund is the responsibility of the Future Fund Board of Guardians with the support of the Future Fund Management Agency. The Future Fund is overseen by an independent Board of Guardians selected on the basis of their expertise in investment management and corporate governance. The current Board composition is:
The Board was chaired by David Murray between 2006 and 2012. Amidst some controversy it was announced that David Gonski would succeed Murray as independent non-executive chairman when Murray's term expired on 3 April 2012. At the same time, Steve Harker, an investment banker from Morgan Stanley in Australia, replaced Brian Watson as a Guardian. David Gonski chaired the Board until January 2014 when it was announced that he would leave to chair the ANZ Bank. Costello was appointed the interim chair until the announcement of his permanent chairmanship in February 2014. Greg Combet replaced Costello as chairman in February 2024.
On 11 September 2004, the Federal Treasurer, Peter Costello, announced that the Future Fund would be established following the 2004 federal election. The Future Fund Act 2006 received Royal Assent on 23 March 2006. On 5 May 2006, $18 billion, derived from government surpluses as well as income from the sale of a third of Telstra in its ongoing privatisation, was deposited into the fund. On 28 February 2007, the government transferred the Commonwealth's remaining 17% stake in Telstra, valued at A$8.9 billion, into the Fund. These contributions and transfers increased the Fund to over A$50 billion by the end of the 2006-2007 financial year.
In March 2007, the opposition Labor Party announced it would withdraw A$2.7 billion from the Future Fund to finance the National Broadband Network, an initiative to install broadband internet infrastructure across Australia, if it won the 2007 election; this proposal prompted government ministers to proclaim that Labor intended to "raid" the Future Fund for their own means. Labor later indicated that the use of any funds from the Future Fund towards a national high speed broadband network will have to comply and meet all requirements of any commercial investment. This included producing a commercial rate of return on the invested funds, with all profits being returned into the Future Fund allowing further investment.
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Future Fund
The Future Fund is an independently managed sovereign wealth fund established in 2006 to strengthen the Australian Government's long-term financial position by making provision for unfunded superannuation liabilities for public servants that will become payable during a period when an ageing population is likely to place significant pressure on the Commonwealth's finances.
The legislation establishing the Future Fund describes its main object as being 'to strengthen the Commonwealth's long-term financial position'. While legislation permits withdrawals from the fund from 1 July 2020, the government indicated in 2017 it intends to allow the fund to continue to accumulate until at least 2026/27 before making withdrawals. The Investment Mandate for the Future Fund is to target a benchmark return of at least the Consumer Price Index + 4 to 5 per cent per annum over the long term, while taking an acceptable but not excessive level of risk.
The Future Fund Board is currently also responsible for six other Australian sovereign wealth funds:
The Education Investment Fund, a fund to provide capital investment in higher education and vocational education and training valued at A$3.9 billion in 2018, was ended by 2019 legislation, which redirected the money to natural disaster relief.
Investment of the Future Fund is the responsibility of the Future Fund Board of Guardians with the support of the Future Fund Management Agency. The Future Fund is overseen by an independent Board of Guardians selected on the basis of their expertise in investment management and corporate governance. The current Board composition is:
The Board was chaired by David Murray between 2006 and 2012. Amidst some controversy it was announced that David Gonski would succeed Murray as independent non-executive chairman when Murray's term expired on 3 April 2012. At the same time, Steve Harker, an investment banker from Morgan Stanley in Australia, replaced Brian Watson as a Guardian. David Gonski chaired the Board until January 2014 when it was announced that he would leave to chair the ANZ Bank. Costello was appointed the interim chair until the announcement of his permanent chairmanship in February 2014. Greg Combet replaced Costello as chairman in February 2024.
On 11 September 2004, the Federal Treasurer, Peter Costello, announced that the Future Fund would be established following the 2004 federal election. The Future Fund Act 2006 received Royal Assent on 23 March 2006. On 5 May 2006, $18 billion, derived from government surpluses as well as income from the sale of a third of Telstra in its ongoing privatisation, was deposited into the fund. On 28 February 2007, the government transferred the Commonwealth's remaining 17% stake in Telstra, valued at A$8.9 billion, into the Fund. These contributions and transfers increased the Fund to over A$50 billion by the end of the 2006-2007 financial year.
In March 2007, the opposition Labor Party announced it would withdraw A$2.7 billion from the Future Fund to finance the National Broadband Network, an initiative to install broadband internet infrastructure across Australia, if it won the 2007 election; this proposal prompted government ministers to proclaim that Labor intended to "raid" the Future Fund for their own means. Labor later indicated that the use of any funds from the Future Fund towards a national high speed broadband network will have to comply and meet all requirements of any commercial investment. This included producing a commercial rate of return on the invested funds, with all profits being returned into the Future Fund allowing further investment.