Australia mobilises sovereign wealth fund for govt priorities
2024.11.20 07:31
By Lewis (JO:) Jackson
SYDNEY (Reuters) – The mandate for Australia’s sovereign wealth fund will grow to include domestic housing, energy and infrastructure in a major revamp unveiled on Wednesday that nudges the A$230 billion ($150 billion) fund towards government priorities.
The changes add new mandates for investments that build more housing and infrastructure, or speed the carbon emission transition to net zero as long as they are “possible, appropriate and consistent with strong returns.” The fund’s return target will not change.
“This will mean more investment where we need it most but not at the expense of returns,” Treasurer Jim Chalmers said in a statement.
A domestic emphasis is common among sovereign wealth funds. Saudi Arabia’s Public Investment Fund increasingly invests at home, while Singapore’s state-owned investor Temasek holds a quarter of its assets domestically.
However, months before an election, the decision is likely to draw criticism from opponents who see the changes as an extension of the centre-left Labor government’s political priorities.
The former chairman of the fund, a long-time treasurer in previous conservative governments, warned last year against spending the fund on political projects.
Chalmers said the fund’s board had been consulted on the changes.
The Future Fund was set up in 2006 with proceeds from the sale of state telco Telstra (OTC:) to cover unfunded pension liabilities and bolster the government’s balance sheet.
Chalmers pledged to delay drawing on the fund until at least 2033 so it has more time to grow. By then the government expects it to hit A$380 billion in assets.
($1 = 1.5326 Australian dollars)
