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 2007 (No. 2)
Paragraph 3 (1) (a) of Schedule 1 to the Future Fund Act 2006 (the Act) provides that, if a target asset level for the Future Fund (the Fund) has been set for the relevant financial year, the responsible Ministers may determine by writing that a specified amount is to be credited to the Future Fund Special Account (Fund Account) on a specified day 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 2007 (No.2) is to specify that $151 million is to be credited to the Fund Account on 22 June 2007. This amount consists of Telstra 3 sale proceeds including minor residual first instalment receipts, prepayment of second instalment receipts and proceeds from the sale of some residual buffer stock.
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. This Determination sets 1 June 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force at whichever is the earliest of the end of the specified day, the time when the target asset level declaration is no longer active and the time of revocation of the Determination (if this occurs).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 on the day it is registered on the Federal Register of Legislative Instruments.
Overview
The Future Fund (Crediting of Additional Amounts) Determination 2007 (No. 2), enacted under the authority of the Treasurer and the Minister for Finance and Administration, was introduced to address the need for crediting additional funds into the Future Fund Special Account (Fund Account) for the 2006-07 financial year. This determination was necessitated by the sale of Telstra 3 assets, including proceeds from minor residual first instalment receipts, prepayment of second instalment receipts, and the sale of some residual buffer stock, amounting to $151 million. The policy objective is to ensure that the Future Fund maintains its target asset level without exceeding it, by crediting the Fund Account on a specified date within the financial year as per the Future Fund Act 2006. The balance day for measuring the Fund's starting position was set as 1 June 2006, and this determination ensures that the additional crediting does not breach the established target asset level. The determination is not subject to disallowance and ceases to be in force under specified conditions.
Scope and Application
The Future Fund (Crediting of Additional Amounts) Determination 2007 (No. 2) applies to the Future Fund, a statutory body established under the Future Fund Act 2006. This determination is made by the responsible Ministers and specifies the crediting of additional funds into the Future Fund Special Account, ensuring that the Fund remains within its designated target asset level. The Act applies to the Future Fund and the Future Fund Special Account, facilitating the crediting of specified amounts derived from transactions such as the sale of assets like Telstra 3 shares. The geographic reach of this legislation is national, given that it pertains to a Commonwealth statutory body. There are no stated exclusions or exemptions within this determination, though the Act ensures that transfers do not exceed the target asset level set for the Fund. The Determination is not subject to disallowance and operates as a legislative instrument under the Legislative Instruments Act 2003, commencing from the date of its registration on the Federal Register of Legislative Instruments.
Key Provisions
The Future Fund (Crediting of Additional Amounts) Determination 2007 (No. 2) establishes that a specified amount of $151 million is to be credited to the Future Fund Special Account on a specified day, 22 June 2007, as per section 3(1)(a) of Schedule 1 to the Future Fund Act 2006. This amount comprises proceeds from the Telstra 3 sale, including minor residual first instalment receipts, prepayment of second instalment receipts, and proceeds from the sale of some residual buffer stock. The Act mandates that the responsible Ministers may determine the crediting of such additional amounts if a target asset level for the Future Fund has been set for the relevant financial year.
In accordance with the Act, the obligation on the responsible Ministers is to ensure that the crediting of additional amounts does not result in the balance of the Fund exceeding the target asset level for the Fund that is in place at the time of the crediting. To facilitate this, the Determination sets 1 June 2006 as the balance day under subparagraph 3(2)(a)(i) of Schedule 1 to the Act, providing a reference date for measuring the starting position of the Fund. This balance day is purely administrative and is used to correctly establish the balance of the Fund.
The Determination ceases to be in force at the earliest of three events: the end of the specified day, the time when the target asset level declaration is no longer active, or the time of revocation of the Determination, should that occur. It is important to note that, while the Determination is considered a legislative instrument under the Legislative Instruments Act 2003, it is not subject to disallowance as it is a ministerial direction. The Determination comes into force on the day it is registered on the Federal Register of Legislative Instruments.
Under this Determination, there are no specific offences or penalties outlined for breach, as it primarily serves to direct the responsible Ministers on the crediting of additional amounts to the Future Fund Special Account. However, any breach of the conditions set by the Act could potentially lead to civil or criminal consequences depending on the severity of the breach, although the specific penalties for such breaches are not detailed in the Determination itself.