Direction set for giant fund
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The Future Fund's makeover has sparked applause, criticism, and warnings of “political meddling”.
The Federal Government has announced significant changes to Australia’s $230 billion Future Fund, aiming to modernise the sovereign wealth fund while retaining its primary mandate to maximise financial returns.
Treasurer Jim Chalmers and Finance Minister Katy Gallagher have outlined a new investment strategy prioritising national challenges such as housing, renewable energy, and infrastructure resilience.
Key changes include issuing a new Investment Mandate to align with these priorities and releasing the first Statement of Expectations for the fund in 15 years.
The government intends to support the fund’s independence while maintaining its target of a 4 to 5 per cent return above inflation.
The Albanese Government has also committed to deferring drawdowns from the fund until at least 2032-33, allowing its value to grow to a projected $380 billion.
The new mandate encourages the Future Fund to support residential housing supply, net zero energy transformation, and resilience-focused infrastructure.
Chalmers says that the fund would still prioritise returns, with investments in these sectors only made where consistent with its financial objectives.
“This will mean more investment where we need it most but not at the expense of returns,” he said.
The initiative has been well-received by some sectors, including from Jocelyn Martin, managing director of the Housing Industry Association.
“An investment in new home building from the Future Fund would support increasing housing supply and could be used to overcome structural barriers,” she told reporters this week.
Former Treasurer Peter Costello, who established the Future Fund in 2006, has criticised the move, calling it a “very bad” idea that risks politicising the fund.
“This belongs to a very old tradition in politics: interfering with market investment for political purposes,” he said.
Costello warned that the new mandate could erode the fund’s international reputation and expose it to lobbying for poorly conceived projects.
Shadow Treasurer Angus Taylor echoed these concerns, accusing the government of using the fund to cover for economic mismanagement.
The government has assured stakeholders of the fund’s continued independence and focus on financial returns.
The Future Fund’s board of guardians has expressed support, stating that investments in national priorities would still be required to meet rigorous risk and return standards.