EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Finance and Administration
Future Fund Act 2006
Proclamation
Subsection 2(1) of the Future Fund Act 2006 (the Act) provides that sections 3 to 85 of the Act commence on a day to be fixed by proclamation. Subsection 2(1) also provides that Schedules 1 to 3 to the Act commence automatically at the same time as sections 3 to 85. However, if these provisions are not commenced within six months of the date the Act receives the Royal Assent, they commence on the first day after the end of that six month period. The Act received the Royal Assent on 23 March 2006.
The purpose of the Proclamation is to fix 3 April 2006 as the day on which sections 3 to 85 of the Act commence.
The Act gives effect to the Government’s commitment to establish a dedicated financial asset fund to meet unfunded superannuation liabilities. The Act establishes:
- the Future Fund (the Fund), which is a financial asset fund consisting of cash and investments of the Fund;
- the Future Fund Board of Guardians (the Board) as a body corporate with statutory responsibility for managing the investments of the Fund; and
- the Future Fund Management Agency (the Agency) as a statutory agency with responsibility for assisting and advising the Board.
Sections 3 to 9 (Part 1) of the Act deals with the object of the Act, definitions and the meaning of financial assets.
Sections 10 to 13 (Part 2) outline the establishment of the Fund and the Special Account and the operation of the Fund.
Sections 14 to 32 (Part 3) deal with matters relating to the investment of the Fund including the objects of investment of the Fund, management of investments of the Fund, the Investment Mandate, restrictions, investment policies, securities lending arrangements, the use of investment managers, exemption from taxation, entitlement to franking credits and realisation of non-financial assets.
Sections 33 to 72 (Part 4) outline the establishment and functions and powers of the Board, terms and conditions for Board members, the process for meetings and resolutions without meetings, reporting obligations of the Board, duties of Board members and processes for dealing with conflicts of interests.
Sections 73 to 82 (Part 5) deal with the establishment and functions of the Agency, the management and staff of the Agency and other provisions such as the application of the Financial Management and Accountability Act 1997, annual reporting of the Agency and the engagement of consultants and advisers to the Board.
Sections 83 to 85 (Part 6) deal with miscellaneous matters including the determination of a Nominated Minister for various provisions of the Act, the crediting of miscellaneous receipts to the Fund and the making of regulations under the Act.
Schedule 1 explains credits of amounts and transfers of financial assets to the Fund whilst Schedule 2 deals with debits of amounts from the Fund. Schedule 3 establishes the concept of the Target Asset Level Declaration, which represents a declaration by an independent actuary of the amount that is expected to offset the present value of projected unfunded superannuation liabilities.
The commencement date of 3 April 2006 allows time to ensure that the Board and Agency are in a position to be able to independently carry out their respective duties when the Act effectively commences.
The Proclamation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.