Greg Combet has eyes firmly on the future with $223bn fund
Greg Combet said he did not come to the role of chairman of the $223bn Future Fund with any preconceived ideas of what it should do.
The Future Fund could step up its investment in renewable energy if it finds new deals with “the right risk return profile,” according to its new chair, Greg Combet.
In an interview with the Australian, on the eve of him being awarded an AO in the King’s Birthday Honours, Mr Combet said he did not come to the role of chairman of the $223bn Future Fund, which he started on June 1, with any preconceived ideas of what it should do.
But the former ACTU secretary, federal government minister for climate change, chair of $220bn industry superannuation fund vehicle IFM Investors, and inaugural chair of the federal government’s Net Zero Agency pointed out that the fund was already a significant investor in renewable energy through its stake in Tilt Renewables.
He said he was not “going in (as Future Fund chair) with any preconceived conceptions about how you might put more into a particular asset class for a specific purpose”’
“Having said that, I don’t think it’s all that well known that the Future Fund already has quite a few investments related to the energy sector and renewables,” he said.
“If they (potential investments in renewables and green energy) have got the right risk-return profiles and they are attractive investment opportunities, certainly it (the Fund) can build it up.”
He said the Future Fund’s main goal was to deliver its mandated return of CPI plus 4-5 per cent a year over the long term.
Mr Combet said he was interested in making the Future Fund’s investments better known, including how it was “assisting the energy transition.”
“There’s a good opportunity, with this change in the board of guardians and me coming in, for us to make it a bit better known exactly where the money is invested and how, for example, it is assisting in the energy transition.”
The largest owner and operator of large-scale wind and solar projects in Australia, the Australian operations of Tilt Renewables were bought by a consortium of the Future Fund, the Queensland Investment Corporation and AGL in 2021.
The Future Fund has a 40 per cent stake in Tilt, which signed a 15-year power purchase agreement with AGL for the latter to take 45 per cent of the output of Tilt’s Rye Park Wind Farm in regional NSW.
Mr Combet takes over following the appointment of two other new guardians to the fund this year – company director Nicola Wakefield Evans and former chief executive of QSuper Rosemary Vilgan.
Mr Combet said the Future Fund was the federal government’s biggest financial asset.
While the returns of the fund are now counted as revenue for the purposes of the budget, Mr Combet said the fact there had been no cash drawn downs from the fund by the government had helped it to keep focusing on investment and have the benefit of compound earnings growth.
The fund has delivered a return of 7.8 per cent a year since its inception in May 2006, and reported 10.1 per cent return for the year to March 31.
The fund has been run at arm’s length from the federal government, a key feature of its establishment by the Howard government under Peter Costello.
Mr Combet said the fund had been a “successful institution meeting its benchmark returns over the long run, (which was) to be respected.”
Mr Combet, who was awarded a Member of the Order of Australia in 2006, has been made an Officer of the Order of Australia (AO) in the King’s Birthday Honours “for distinguished service to the people and parliament of Australia and to the banking and superannuation industries”.
He began his career in the trade union movement, rising to secretary of the ACTU from 1999 to 2007, with a close relationship with former ACTU leader Bill Kelty.
He went into politics in 2007, as ALP member for Charlton in the Newcastle area of NSW, becoming a cabinet minister in 2010 the Gillard government.
His ministerial roles included defence materiel and science in 2010 and climate change and energy Efficiency from 2010 to 2013.
More Coverage
Greens brawl with German ‘allies’ over Israel
The Greens’ NSW branch has lashed the position of the German Greens on Israel in a letter demanding the party’s sitting members more strongly condemn the Jewish state.
Federal Labor on a collision course with miners over green push
The federal government has made a powerful enemy for itself in the west after the Chamber of Minerals and Energy WA said it would fight Labor’s push for so-called nature-positive laws.