Housing a growing home for Future Fund investment

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Housing a growing home for Future Fund investment

Investments that help boost housing supply and accelerate the clean energy transition will be prioritised under a revamped mandate for Australia’s $230 billion sovereign wealth fund.

However, consideration of “national priorities” will always play second fiddle to maximising returns.

“This will mean more investment where we need it most but not at the expense of returns,” Finance Minister Katy Gallagher and Treasurer Jim Chalmers said in a statement.

“The new investment mandate will require the fund to consider Australia’s national priorities in its investment decisions, where possible, appropriate and consistent with strong returns.”

The fund will stick with its existing benchmark return rate of the consumer price index plus four to five per cent per annum over the long term.

There will be no change to the expected risk profile.

As well as the energy transition and housing supply, locally-based infrastructure was similarly flagged as a priority.

The sovereign wealth fund will also become an ongoing feature of Australia’s economy under the federal government’s revamp.

Drawdowns from the fund will be deferred until at least 2032/33.

Earlier in the year, former climate change minister and previous Net Zero Economy Agency boss Greg Combet was picked to replace former Future Fund chairman and founder Peter Costello.

Mr Combet welcomed Thursday’s announcement.

“The announcements by the government mean that the Future Fund will be in place for years to come,” he said.

“This is a great outcome for all Australians.”

Mr Combet said the decision to defer withdrawals would allow the fund to provide more focus and resources to the areas of national priority identified in the new investment mandate.

The fund already invested in the priority areas, he said, such as new capacity delivered by Tilt Renewables, one of the largest operators and developers of green energy infrastructure in the country.

The Future Fund oversees six other wealth funds, including a $22.3 billion medical research fund, a $4.4 billion disaster ready fund and a $16.9 billion disability care fund.

It also oversees the $10 billion Housing Australia Future Fund, which was set up by the Labor government in 2023 to deal with housing supply.

Its portfolio has grown steadily since its inception and is expected to hit $380 billion by the early 2030s.

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