EXPLANATORY STATEMENT
Issued by the Authority of the Treasurer and the Minister for Finance and Administration
Future Fund Act 2006
Future Fund (Crediting of Additional Amounts) Determination 2006
Paragraph 3 (1) (b) of Schedule 1 to the Future Fund Act 2006 (the Act) provides that, if a target asset level for the Future Fund (for the relevant financial year) has been set, the responsible Ministers may determine by writing that a specified amount is to be credited to the Future Fund Special Account – in specified instalments on specified days in the financial year.
The target asset level declaration for the 2006-07 financial year has been issued by the Designated Actuary in accordance with Schedule 3 of the Act.
The purpose of this Future Fund (Crediting of Additional Amounts) Determination 2006 is to specify the instalment amounts and dates on which $22.277 billion is to be credited to the Future Fund Special Account (Fund Account). The amounts and dates on which the amounts are to be credited to the Fund Account are specified in the table below.
Date | Amount (billion) |
22 January 2007 | $18.639 |
28 February 2007 | $ 3.638 |
The amount to be transferred on 22 January 2007 comprises $10 billion from the 2005-06 Budget surplus and $8.639 billion from the first instalment of Telstra sale proceeds.
The amount to be transferred on 28 February 2007 is the remainder of the 2005-06 Budget surplus.
The Act provides that amounts may be transferred to the Fund, provided that the transfer does not increase the balance of the Fund above the target asset level for the Fund that is in place at the time of the transfer.
To correctly establish the balance of the Fund, a ‘balance day’ must be declared by the responsible Ministers. The balance day is administrative in nature and is used as a reference date for measurement of the starting position of the Fund. The Determination sets 8 December 2006 as the balance day for this purpose under subparagraph 3 (2) (a) (i) of Schedule 1 to the Act.
The determination ceases to be in force at whichever is the earliest of the end of the last specified instalment day, the time when the target asset level declaration is no longer active and the time of revocation of the determination (if this occurs).
The Determination is deemed to be a legislative instrument for the purpose of the Legislative Instruments Act 2003. However, the Determination, as a ministerial direction, is not disallowable.
The Determination commences the day after registration on the Federal Register of Legislative Instruments.
Overview
The Future Fund Act 2006 was enacted to address the need for a long-term investment vehicle for the Commonwealth's superannuation liabilities. This Act was introduced by the Australian Parliament, aiming to provide a sustainable financial future for the nation's superannuation obligations. The policy objective is to establish a robust and well-managed fund that can generate returns to offset future superannuation costs. The Future Fund (Crediting of Additional Amounts) Determination 2006 was made under the authority granted by the Act to specify the crediting of additional funds into the Future Fund Special Account. This Determination outlines the amounts and specific dates for crediting $22.277 billion to the Fund, ensuring compliance with the set target asset levels and the balance day requirements. The Determination is not subject to disallowance and comes into effect upon registration on the Federal Register of Legislative Instruments.
Scope and Application
The Future Fund (Crediting of Additional Amounts) Determination 2006 applies to the Future Fund as established under the Future Fund Act 2006. This determination outlines the specific amounts and dates for crediting additional funds to the Future Fund Special Account for the financial year 2006-07. It is applicable to the responsible Ministers who are empowered under the Act to credit specified amounts to the Fund Account in accordance with the declared target asset level. The Determination specifies that $22.277 billion will be credited in two instalments, with $18.639 billion to be credited on 22 January 2007 and the remaining $3.638 billion on 28 February 2007. The geographic reach of this legislation is national, as it pertains to the Commonwealth of Australia's Future Fund. The Determination does not specify any exclusions or exemptions but operates within the constraints set by the Future Fund Act 2006, ensuring that the transfer of funds does not exceed the target asset level. The Determination is not subject to disallowance and takes effect from the day after its registration on the Federal Register of Legislative Instruments.
Key Provisions
The Future Fund (Crediting of Additional Amounts) Determination 2006, under paragraph 3(1)(b) of Schedule 1 of the Future Fund Act 2006, mandates that a specified amount of $22.277 billion be credited to the Future Fund Special Account in two instalments during the 2006-07 financial year. This determination provides the exact dates and amounts for these credits, with $18.639 billion credited on 22 January 2007 and $3.638 billion on 28 February 2007. The first instalment on 22 January 2007 consists of $10 billion from the 2005-06 Budget surplus and $8.639 billion from the first instalment of Telstra sale proceeds, while the second instalment on 28 February 2007 comprises the remainder of the 2005-06 Budget surplus.
The obligations imposed by the Act on the responsible Ministers include ensuring that the target asset level for the Future Fund is not exceeded by the transfers. This necessitates the declaration of a balance day, which serves as the reference date for measuring the Fund's starting position. In this instance, 8 December 2006 has been declared as the balance day under subparagraph 3(2)(a)(i) of Schedule 1 of the Act. The Determination also includes provisions for its cessation, which will occur at the earliest of the end of the last specified instalment day, the deactivation of the target asset level declaration, or the revocation of the determination if applicable.
The Future Fund (Crediting of Additional Amounts) Determination 2006 is not subject to disallowance and is considered a legislative instrument under the Legislative Instruments Act 2003. It commences the day after its registration on the Federal Register of Legislative Instruments. While the Determination itself does not explicitly detail offences or penalties for non-compliance, breaches of the overarching Future Fund Act 2006 may lead to civil or criminal consequences. The Act empowers the court to impose penalties, including fines, for breaches. The maximum penalties for serious breaches may be substantial, reflecting the importance of compliance with the Act’s provisions in managing the Future Fund effectively.