Australia Wealth Fund Seeks Mandate Changes

Australia’s sovereign wealth fund has requested the government to change the wording of a new investment mandate. This information comes from documents that were made public through a Freedom of Information request.

The government unveiled a new investment mandate for the Future Fund, which is currently valued at A$230 billion (approximately $143 billion), in November. This new mandate requires the fund to take into account national priorities such as clean energy, housing, and infrastructure projects in its investment strategy.

According to heavily redacted documents, consultations took place regarding the mandate, with notable participants including the Chair of the Future Fund Board of Guardians, Greg Combet, and Treasury Secretary Steven Kennedy. The Future Fund is sometimes referred to as the Agency in the documents.

Requested Changes

In an August 21 briefing note, the documents indicated that the original wording stated that the Board must consider national priorities. However, the Agency preferred the direction be altered to suggest that the Board should consider these priorities instead. The information was first reported by the Australian Financial Review.

When the government published the finalized version of the investment mandate in November, it emphasized that the Future Fund must consider national priorities in its investment decisions whenever it is possible, appropriate, and consistent with generating strong returns. Importantly, the government did not change the benchmark rate of return for the Future Fund, keeping it at 4%-5% above inflation.

Alignment with Specific Sectors

Moreover, the Future Fund expressed a preference for its national priorities to align with specific sectors. This stance contrasts with the government's push for alignment with the Future Made in Australia initiative, which aims to boost local manufacturing by attracting investments in key areas, including clean energy.

Australia, Wealth, Fund