Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Future Fund Bill 2006

2004-2005

 

The Parliament of the

Commonwealth of Australia

 

HOUSE OF REPRESENTATIVES

 

 

 

 

Presented and read a first time

 

 

 

 

 

 

 

 

 

Future Fund Bill 2005

 

No.      , 2005

 

(Finance and Administration)

 

 

 

A Bill for an Act about the Future Fund, and for related purposes

   

   

   



Contents

 

Part 1—Introduction                                                                                                             1

1............ Short title............................................................................................. 1

2............ Commencement................................................................................... 1

3............ Object.................................................................................................. 2

4............ Simplified outline................................................................................ 3

5............ Definitions.......................................................................................... 3

6............ Financial assets................................................................................... 7

7............ Crown to be bound............................................................................. 8

8............ Extension to external Territories.......................................................... 8

9............ Extra-territorial application.................................................................. 8

Part 2—The Future Fund                                                                                                  9

10.......... Simplified outline................................................................................ 9

11.......... Establishment of the Future Fund....................................................... 9

12.......... Establishment of the Future Fund Special Account............................. 9

13.......... Operation of the Future Fund.............................................................. 9

Part 3—Investment of the Future Fund                                                                 11

14.......... Simplified outline.............................................................................. 11

15.......... Objects of investment of the Fund.................................................... 11

16.......... Investment of the Fund..................................................................... 11

17.......... Management of investments of the Fund.......................................... 12

18.......... Investment Mandate.......................................................................... 12

19.......... Board to be consulted on Investment Mandate.................................. 14

20.......... Compliance with Investment Mandate.............................................. 14

21.......... Board must not trigger the takeover provisions of the Corporations Act 2001         15

22.......... Board must not have a significant stake in a foreign listed company. 16

23.......... Borrowing......................................................................................... 17

24.......... Investment policies............................................................................ 17

25.......... Derivatives........................................................................................ 18

26.......... Additional financial assets................................................................. 19

27.......... Securities lending arrangements........................................................ 19

28.......... Investment managers......................................................................... 19

29.......... Custody of securities......................................................................... 20

30.......... Exemption from taxation................................................................... 20

31.......... Franking credits................................................................................ 21

32.......... Realisation of non-financial assets.................................................... 21

Part 4—The Future Fund Board of Guardians                                                 23

Division 1—Introduction                                                                                           23

33.......... Simplified outline.............................................................................. 23

Division 2—Establishment and functions of the Future Fund Board of Guardians         24

34.......... Establishment of the Future Fund Board of Guardians..................... 24

35.......... Board’s functions.............................................................................. 24

36.......... Board’s ordinary powers.................................................................. 24

37.......... Board is a body corporate................................................................. 24

38.......... Membership...................................................................................... 25

39.......... Application of the Corporations Act 2001 ........................................ 26

Division 3—Terms and conditions for Board members                           27

40.......... Term of appointment and related matters for Board members........... 27

41.......... Remuneration and allowances of Board members............................. 27

42.......... Leave of absence of Board members................................................. 27

43.......... Resignation of Board members......................................................... 27

44.......... Termination of appointment of Board members................................ 28

45.......... Other terms and conditions of Board members................................. 28

46.......... Acting Board members..................................................................... 28

Division 4—Meetings                                                                                                   30

47.......... Holding of meetings.......................................................................... 30

48.......... Who is to preside at a meeting........................................................... 30

49.......... Quorum............................................................................................. 30

50.......... Voting............................................................................................... 31

51.......... Records of meetings.......................................................................... 31

Division 5—Resolutions without meetings                                                       32

52.......... Resolutions without meetings........................................................... 32

53.......... Record of resolutions........................................................................ 32

Division 6—Reporting obligations                                                                        33

54.......... Nominated Minister may require Board to prepare reports or give information       33

55.......... Keeping the responsible Ministers informed etc............................... 34

Division 7—Duties of Board members etc.                                                      35

56.......... Care and diligence—civil obligation.................................................. 35

57.......... Good faith—civil obligation.............................................................. 35

58.......... Use of position—civil obligation...................................................... 36

59.......... Use of information—civil obligation................................................. 36

60.......... Good faith—criminal offence............................................................ 37

61.......... Use of position—criminal offence.................................................... 37

62.......... Use of information—criminal offence............................................... 37

63.......... Compliance with statutory duties...................................................... 38

64.......... Interaction of sections 56 to 62 with other laws etc........................... 38

65.......... Reliance on information or advice provided by others...................... 39

66.......... Consequences of breach of duty—additional effect of the Commonwealth Authorities and Companies Act 1997   39

67.......... Insurance for certain liabilities of Board members............................ 40

Division 8—Conflict of interests                                                                            42

68.......... Material personal interest—Board member’s duty to disclose.......... 42

69.......... Board member may give other Board members standing notice about an interest    43

70.......... Interaction of sections 68 and 69 with other laws etc........................ 44

71.......... Restrictions on voting....................................................................... 44

72.......... Ministerial power to make declarations and class orders................... 45

Part 5—The Future Fund Management Agency                                              47

Division 1—Introduction                                                                                           47

73.......... Simplified outline.............................................................................. 47

Division 2—Establishment and functions of the Future Fund Management Agency      48

74.......... Establishment of the Future Fund Management Agency................... 48

75.......... Functions of the Agency................................................................... 48

Division 3—Management and staff of the Future Fund Management Agency 49

76.......... Duties of the Chair............................................................................ 49

77.......... Staff of the Agency........................................................................... 49

78.......... Consultants and persons seconded to the Agency............................. 49

79.......... Chair not subject to direction by the Board on certain matters........... 50

Division 4—Other provisions                                                                                  51

80.......... Application of the Financial Management and Accountability Act 1997   51

81.......... Annual report.................................................................................... 51

82.......... Consultants and advisers to the Board.............................................. 52

Part 6—Miscellaneous                                                                                                        54

83.......... Nominated Minister.......................................................................... 54

84.......... Miscellaneous receipts to be credited to the Fund Account............... 54

85.......... Regulations....................................................................................... 54

Schedule 1—Credits of amounts, and transfers of financial assets, to the Future Fund                                                                                                                          55

Part 1—Introduction                                                                                                           55

1............ Simplified outline.............................................................................. 55

Part 2—Credits of amounts to the Future Fund                                               56

2............ Credit of $18 billion to the Fund Account......................................... 56

3............ Credit of additional amounts to the Fund Account—Ministerial determinations      56

4............ Duration of subclause 3(1) determinations........................................ 57

5............ Credit of amounts to the Fund Account—gifts................................. 58

Part 3—Transfers of financial assets to the Future Fund                           59

6............ Transfers to the Fund—Commonwealth-owned financial assets...... 59

7............ Transfers of financial assets to the Fund—gifts................................ 61

8............ Ministerial directions about transferred financial assets.................... 61

9............ Continuing effect of instruments relating to transferred financial assets 62

Schedule 2—Debits of amounts from the Future Fund       63

1............ Simplified outline.............................................................................. 63

2............ Purposes of the Fund Account.......................................................... 63

3............ Board must ensure that there is sufficient money to cover the main purposes of the Fund Account        64

Schedule 3—Target asset level declarations                                       66

1............ Simplified outline.............................................................................. 66

2............ Designated actuary............................................................................ 66

3............ Target asset level declarations........................................................... 66

4............ Reliance on projections when making target asset level declarations etc.  68

 



A Bill for an Act about the Future Fund, and for related purposes

The Parliament of Australia enacts:



Schedule 1 Credits of amounts, and transfers of financial assets, to the Future Fund

Note:       See section 13.

Schedule 2 Debits of amounts from the Future Fund

Note:       See section 13.

   

   

1   Simplified outline

                   The following is a simplified outline of this Schedule:

•      Amounts may be debited from the Fund Account in accordance with the purposes of the Fund Account.

•      The main purpose of the Fund Account is to discharge unfunded superannuation liabilities from whichever is the earlier of:

               (a)     the time when the balance of the Fund is greater than or equal to the target asset level;

              (b)     1 July 2020.

Note:          The target asset level is specified in a declaration (a target asset level declaration ) given by the designated actuary under Schedule 3. The target asset level represents the amount that is expected to offset the present value of projected unfunded superannuation liabilities.

2   Purposes of the Fund Account

                   The purposes of the Fund Account are as follows:

                     (a)  discharging, in whole or in part, an unfunded superannuation liability that becomes payable in a financial year, where:

                              (i)  the financial year ends before 1 July 2020; and

                             (ii)  a target asset level declaration is in force for the financial year; and

                            (iii)  the balance of the Fund, as at the start of the financial year, is not less than the target asset level specified in the target asset level declaration;

                     (b)  discharging, in whole or in part, an unfunded superannuation liability that becomes payable in a financial year beginning on or after 1 July 2020;

                     (c)  paying remuneration and allowances of Board members;

                     (d)  paying the costs of, or incidental to, the acquisition of financial assets under section 16;

                     (e)  paying expenses of an investment of the Fund;

                      (f)  paying the costs of, or incidental to, the acquisition of derivatives under section 25;

                     (g)  paying or discharging the costs, expenses and other obligations incurred by the Board under a contract between the Board and an investment manager;

                     (h)  paying or discharging the costs, expenses and other obligations incurred in connection with the establishment, maintenance or operation of a bank account of the Board;

                      (i)  paying a premium in respect of a contract of insurance entered into by the Board;

                      (j)  paying or discharging any other costs, expenses, obligations or liabilities incurred by the Board;

                     (k)  paying remuneration, and other employment-related costs and expenses, in respect of members of the staff of the Agency;

                      (l)  paying or discharging the costs, expenses and other obligations incurred by the Commonwealth under a contract entered into under section 78 or 82;

                    (m)  paying or discharging the costs, expenses and other obligations incurred by the Commonwealth in connection with the establishment or operation of the Agency.

Note 1:       See section 21 of the Financial Management and Accountability Act 1997 (debits from Special Accounts).

Note 2:       A target asset level declaration is given by the designated actuary under Schedule 3.

3   Board must ensure that there is sufficient money to cover the main purposes of the Fund Account

                   The Board must take all reasonable steps to ensure that, during a financial year to which paragraph 2(a) or (b) of this Schedule applies, the amount of money standing to the credit of the Fund Account is sufficient to cover the purpose mentioned in that paragraph.

Note:          This may require the Board to realise an investment of the Fund in accordance with section 17.



 

Schedule 3 Target asset level declarations

Note:       See section 13.

   

   

1   Simplified outline

                   The following is a simplified outline of this Schedule:

•      The designated actuary is an actuary specified in a determination made by the nominated Minister.

•      The target asset level is specified in a declaration (a target asset level declaration ) given by the designated actuary.

•      The target asset level represents the amount that is expected to offset the present value of projected unfunded superannuation liabilities.

2   Designated actuary

             (1)  For the purposes of this Act, the designated actuary is an actuary specified in a written determination made by the nominated Minister under this subclause.

Note:          For variation and revocation, see subsection 33(3) of the Acts Interpretation Act 1901 .

             (2)  A determination under subclause (1) is not a legislative instrument for the purposes of the Legislative Instruments Act 2003 .

             (3)  As soon as practicable after a determination is made under subclause (1), the Chair must cause a copy of the determination to be published on the Internet.

3   Target asset level declarations

             (1)  The designated actuary may give the responsible Ministers:

                     (a)  a written declaration stating that a specified amount is the target asset level for a specified financial year; and

                     (b)  a written statement setting out the designated actuary’s reasons for specifying the target asset level.

             (2)  A declaration under subclause (1) is to be known as a target asset level declaration for the financial year concerned.

             (3)  2 or more target asset level declarations may be set out in the same document.

             (4)  A target asset level declaration for a particular financial year may be given before or during the financial year.

             (5)  A target asset level for a particular financial year must not be specified in a target asset level declaration unless the designated actuary is satisfied that:

                     (a)  if the balance of the Fund, as at the start of the financial year, were equal to the target asset level for the financial year;

the balance of the Fund would (based on the designated actuary’s best estimate) be expected to offset:

                     (b)  the present value of projected unfunded superannuation liabilities in respect of services rendered before the start of the financial year.

             (6)  A target asset level declaration for a particular financial year remains in force until whichever is the earliest of the following:

                     (a)  the end of the financial year;

                     (b)  the occurrence of an event specified in the declaration;

                     (c)  if the declaration is revoked—the time when the declaration is revoked.

             (7)  The designated actuary must take all reasonable steps to ensure that:

                     (a)  the first target asset level declaration is given as soon as practicable after the commencement of this clause; and

                     (b)  if a target asset level declaration for a particular financial year ceases to be in force before the end of the financial year—a new target asset level declaration for the financial year is given as soon as practicable afterwards; and

                     (c)  not more than one target asset level declaration for the same financial year is in force at the same time; and

                     (d)  not more than 5 target asset level declarations for different financial years are in force at the same time.

             (8)  A target asset level declaration may be revoked, but not varied, in accordance with subsection 33(3) of the Acts Interpretation Act 1901 .

             (9)  A target asset level declaration is not a legislative instrument for the purposes of the Legislative Instruments Act 2003 .

           (10)  As soon as practicable after receiving:

                     (a)  a target asset level declaration; and

                     (b)  a statement setting out the designated actuary’s reasons for specifying the target asset level;

the nominated Minister must cause:

                     (c)  a copy of the declaration; and

                     (d)  a copy of the statement;

to be published on the Internet.

           (11)  If a target asset level declaration ceases to be in force, the cessation does not affect:

                     (a)  the crediting of an amount to the Fund Account; or

                     (b)  the transfer of a financial asset to the Board; or

                     (c)  the debiting of an amount from the Fund Account;

before the cessation.

4   Reliance on projections when making target asset level declarations etc.

                   In making a target asset level declaration, the designated actuary may:

                     (a)  rely on, or have regard to, the projections, findings, estimates, opinions or conclusions of any other actuaries who have conducted, or are conducting, actuarial reviews of:

                              (i)  a scheme under which superannuation benefits are payable; or

                             (ii)  a South Australian railways arrangement; or

                            (iii)  a Tasmanian railways arrangement; and

                     (b)  make such assumptions and estimates as the designated actuary considers reasonable; and

                     (c)  have regard to such other matters as the designated actuary considers relevant.