New investment fund shifts Future Fund focus to ‘national priorities’

The Albanese government is announcing sweeping changes to Australia’s sovereign wealth fund, to “maximise its role” for the future.

The Albanese government is making sweeping changes to Australia’s sovereign wealth fund in a bid to restrict withdrawals and better align it with “national priorities”.

The Future Fund is a pool of cash for national investments to help Australia with long-term financial positioning, essentially giving the federal government savings to dip into.

Treasurer Jim Chalmers and Finance Minister Katy Gallagher announced late on Wednesday the government was pushing back withdrawals until “at least 2023-33” and issuing a new investment mandate.

“The independent Future Fund already plays a crucial role in our economy and the government wants to make sure it can play an important role in the decades ahead,” Mr Chalmers and Senator Gallagher said in a statement.

“The Australian economy faces major structural shifts including from the global net zero transformation, technological and demographic change, and global fragmentation.

“The Future Fund has made clear it can play a prominent role in capitalising on these economic opportunities and supporting Australia’s prosperity.”

Treasurer Jim Chalmers and Finance Minister Katy Gallagher are announcing sweeping changes to Australia’s sovereign wealth fund. Picture: NewsWire / Martin Ollman

They said the fund’s main focus would stay on “maximising its returns”, but that the changes aimed to “maximise its role in delivering for Australians in the future”.

“The new Investment Mandate will require the fund to consider Australia’s national priorities in its investment decisions where possible, appropriate and consistent with strong returns,” they said.

Those national priorities include housing, transitioning to a net zero powergrid and supporting Australia’s domestic supply chain.

Current legislation has allowed withdrawals from the Future Fund since July 2020. But the former Coalition government committed to not eating into it until at least 2026-27.

Mr Chalmers and Senator Gallagher raised that commitment, saying the government “won’t start any drawdowns from the Fund until at least 2032-33, providing the Fund the certainty it needs to continue to build its portfolio.”

“By 2032-33, the $230bn Future Fund is expected to grow to $380bn,” they said.

“The government remains committed to the Fund’s independence and commercial focus.”

The fund’s board has welcomed the changes but made clear it would maintain its independence.

“The board of guardians will continue to make investment decisions independent of government with the priority of generating commercial returns,” chair Greg Combet said in a statement.

“The government’s decision to defer withdrawals from the Future Fund until at least 2032-33

provides the Future Fund with the confidence to provide more focus and resources to the

areas of national priority identified in the new Investment Mandate that align with our risk

and return hurdle.”