EXPLANATORY STATEMENT
Issued by the Authority of the Treasurer and the Minister for Finance and Deregulation
Future Fund Act 2006
Future Fund (Crediting of Additional Amounts) Determination 2008
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 2008 is to specify that $3,900,000,000 is to be credited to the Fund Account on 25 June 2008. This amount consists of a portion of the proceeds from the Telstra 3 sale second instalment payments.
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 30 April 2008 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force at whichever is the earliest of the end of the specified day, the time when the target asset level declaration is no longer active and the time of revocation of the Determination (if this occurs).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 2008, issued under the Future Fund Act 2006, was enacted to address the specific need of crediting a particular amount to the Future Fund Special Account. This legislative instrument was issued by the Treasurer and the Minister for Finance and Deregulation to ensure that an additional $3,900,000,000 from the proceeds of the Telstra 3 sale second instalment payments is credited to the Fund on 25 June 2008. The determination also sets 30 April 2008 as the balance day for measuring the Fund's starting position, as mandated by the Act. This determination is crucial for maintaining the Fund's balance within the prescribed target asset levels and is effective from the day it is registered on the Federal Register of Legislative Instruments.
Scope and Application
The Future Fund (Crediting of Additional Amounts) Determination 2008 applies to the Future Fund Special Account, which is governed by the Future Fund Act 2006. This Determination is issued by the responsible Ministers in accordance with the Act and specifies an additional crediting amount of $3.9 billion to be transferred to the Fund Account on 25 June 2008, derived from the proceeds of the Telstra 3 sale second instalment payments. This legislative instrument is applicable across the Commonwealth of Australia and does not extend beyond federal jurisdiction. The crediting process must be conducted in a manner that ensures the Fund's balance does not exceed the set target asset level for that financial year. The Determination also sets 30 April 2008 as the balance day, serving as a reference point for measuring the Fund's starting position. It is important to note that this Determination, while serving as a legislative instrument under the Legislative Instruments Act 2003, is not subject to disallowance as it is a ministerial direction. The Determination takes effect from the date it is registered on the Federal Register of Legislative Instruments and will cease to be in force upon the earliest of the specified crediting date, the deactivation of the target asset level declaration, or its revocation.
Key Provisions
The Future Fund (Crediting of Additional Amounts) Determination 2008 sets out key provisions that specify the crediting of additional funds to the Future Fund. Under section 3(1)(a) of Schedule 1 to the Future Fund Act 2006, the responsible Ministers have the authority to credit a specified amount to the Future Fund Special Account on a designated day within the financial year if a target asset level for the Fund has been established. This Determination directs that $3,900,000,000 be credited to the Fund Account on 25 June 2008, using proceeds from the Telstra 3 sale second instalment payments. This crediting must be conducted without exceeding the target asset level for the Fund set for that financial year.
The Act imposes several obligations on the parties involved. Primarily, the responsible Ministers must declare a balance day by which the starting position of the Fund is measured. According to this Determination, 30 April 2008 is designated as the balance day, as stated in subparagraph 3(2)(a)(i) of Schedule 1 to the Act. This balance day is administrative and is crucial for correctly establishing the Fund's balance. Additionally, the Act ensures that any transfer of funds to the Fund does not cause the balance to surpass the target asset level in effect at the time of the transfer.
Breach of the provisions outlined in this Determination can lead to significant consequences. While the Determination itself is not subject to disallowance under the Legislative Instruments Act 2003, it is imperative to adhere to the crediting directives to avoid any mismanagement of the Fund's assets. The Determination will cease to be in force at the earliest of the specified crediting day, the time when the target asset level declaration is no longer active, or if the Determination is revoked. Failure to comply with the crediting provisions could result in financial discrepancies or mismanagement of the Fund, which might attract further scrutiny or corrective measures by the relevant authorities.