Australia Wealth Fund Sought to Soften Mandate, Documents Show

Australia's sovereign wealth fund, known as the Future Fund, has requested changes to the language of a proposed new investment mandate. This information was revealed through documents obtained via a Freedom of Information request.

Background on the Future Fund

The Future Fund plays a vital role in managing the country's $230 billion ($143 billion) investments. In November, the government introduced a new mandate requiring the Fund to consider national priorities, which include important areas such as clean energy, housing, and infrastructure projects when making investment decisions.

Requested Changes to the Mandate

Documents indicate that the Future Fund asked to modify the mandate's wording to soften its obligations. Specifically, the Fund suggested changing the language from "must consider" national priorities to "should consider" them. This adjustment reflects a desire for more flexibility in how the Fund approaches its investment strategies.

Government and Fund Interactions

Redacted documents show discussions between key stakeholders, including Greg Combet, Chair of the Future Fund Board of Guardians, and Treasury Secretary Steven Kennedy. The intention behind the government's final version of the mandate was to ensure that the Future Fund incorporates national priorities where possible, while still aiming for strong returns. Despite the requested changes, the government's benchmark rate of return for the Future Fund remained at 4%-5% above inflation.

Specificity of National Priorities

In addition to the changes in wording, the Future Fund expressed a preference for its national priorities to be aligned with specific sectors. This was in contrast to the government's broader "Future Made in Australia" initiative, which advocates for local manufacturing and investment in key sectors, particularly clean energy.

The discussions surrounding the Future Fund's investment mandate highlight the complexities of balancing national interests with the need for financial returns. As the government aims to guide the Future Fund toward investments that support the country's strategic goals, the Fund's requests suggest a desire to maintain a degree of autonomy in its investment decisions.

Australia, Wealth, Investment