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. 3)
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 2007-08 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. 3) is to specify that $7.0 billion is to be credited to the Fund Account on 24 August 2007. The amount to be credited to the Fund Account is part of the realised surplus from 2006-07.
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 20 August 2007 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force at whichever is the earliest of the end of the specified day, the time when the target asset level declaration is no longer active and the time of revocation of the Determination (if this occurs).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 Act 2006 was enacted to establish the Future Fund and provide a legal framework for its operation, governance, and management. This legislation was introduced to address the need for a robust long-term savings vehicle to support future superannuation liabilities and other public sector superannuation schemes. The Future Fund Act was enacted by the Parliament of Australia with the aim of ensuring financial sustainability for future generations. The Future Fund (Crediting of Additional Amounts) Determination 2007 (No. 3), issued under the authority of the Treasurer and the Minister for Finance and Administration, specifies that an additional $7.0 billion is to be credited to the Future Fund Special Account on 24 August 2007. This amount is part of the realised surplus from the 2006-07 financial year. The determination also sets 20 August 2007 as the balance day, which serves as a reference date for measuring the starting position of the Fund, ensuring that the transfer complies with the Act's provisions regarding the target asset level. This legislative instrument is not subject to disallowance but ceases to be in force under certain conditions, including the end of the specified day, the deactivation of the target asset level declaration, or revocation of the Determination.
Scope and Application
The Future Fund (Crediting of Additional Amounts) Determination 2007 (No. 3) applies to the Future Fund as established under the Future Fund Act 2006. This Act governs the Future Fund, which is a sovereign wealth fund established by the Australian Government. The Determination provides the mechanism for crediting additional funds to the Future Fund Special Account based on a specified amount, which in this instance is $7.0 billion, to be credited on 24 August 2007. The Act applies to the Commonwealth of Australia, meaning its jurisdiction is national. The crediting process must adhere to the target asset level set for the Fund to ensure that the balance of the Fund does not exceed this level. The balance day, set by this Determination as 20 August 2007, is a crucial administrative date used to measure the starting position of the Fund. The Determination is not subject to disallowance, although it is considered a legislative instrument under the Legislative Instruments Act 2003.
Key Provisions
The Future Fund (Crediting of Additional Amounts) Determination 2007 (No. 3) specifies that an additional amount of $7.0 billion is to be credited to the Future Fund Special Account on 24 August 2007, as outlined in paragraph 3 (1) (a) of Schedule 1 to the Future Fund Act 2006 (the Act). This crediting is part of the realised surplus from the 2006-07 financial year. The responsible Ministers have the authority to determine such crediting if a target asset level for the Future Fund has been set for the relevant financial year. This crediting is intended to ensure that the Fund remains within its target asset level, which is a crucial aspect of the Fund's financial management as per the Act.
Under the Future Fund Act 2006, the responsible Ministers are tasked with ensuring that the transfer of funds to the Future Fund does not exceed the target asset level established for that financial year. To maintain this balance, the Act requires the declaration of a 'balance day', which serves as a reference point for measuring the starting position of the Fund. This Determination sets 20 August 2007 as the balance day, as per subparagraph 3 (2) (a) (i) of Schedule 1 to the Act. This date is crucial for accurately establishing the Fund's balance and ensuring that crediting of additional amounts does not lead to an excess over the target asset level.
The Determination imposes specific obligations on the responsible Ministers to manage the crediting of additional amounts to the Future Fund. They must ensure that the crediting is in accordance with the Act and does not breach the established target asset level. The Determination also mandates that the balance day be set appropriately to measure the Fund's starting position accurately. Additionally, the Determination stipulates that it ceases to be in force under certain conditions, such as the end of the specified day, the inactivation of the target asset level declaration, or the revocation of the Determination itself. This ensures that the Determination remains relevant and effective only for the duration necessary to achieve its purpose.
The Future Fund (Crediting of Additional Amounts) Determination 2007 (No. 3) does not provide for specific offences, penalties, or civil/criminal consequences for its breach. However, any failure by the responsible Ministers to comply with the Act's provisions could lead to broader legal consequences. The Determination, as a ministerial direction, is not subject to disallowance under the Legislative Instruments Act 2003. This means that while there are no specific penalties outlined for breaching this Determination, any non-compliance with the Act's requirements could result in legal actions under the general provisions of the Act or other relevant legislation. The Determination's validity and enforceability are thus contingent upon adherence to the overarching legislative framework provided by the Future Fund Act 2006.