A Bill for an Act to establish the Asset Recycling Fund, and for related purposes
The Parliament of Australia enacts:
Part 1—Preliminary
1 Short title
This Act may be cited as the Asset Recycling Fund Act 2014.
2 Commencement
This Act commences on 1 July 2014.
3 Simplified outline of this Act
This Act sets up the Asset Recycling Fund, which consists of:
(a) the Asset Recycling Fund Special Account; and
(b) the investments of the Asset Recycling Fund.
The main purposes of the Asset Recycling Fund Special Account are:
(a) to transfer amounts to the COAG Reform Fund in order to make grants of financial assistance to the States and Territories for expenditure incurred under the National Partnership Agreement on Asset Recycling; and
(b) to transfer amounts to the COAG Reform Fund in order to make grants of financial assistance to the States and Territories for expenditure incurred under the National Partnership Agreement on Land Transport Infrastructure Projects; and
(c) to transfer amounts to the COAG Reform Fund in order to make infrastructure national partnership grants; and
(d) to transfer amounts to the Asset Recycling Fund Infrastructure Special Account to enable the making of infrastructure payments.
The Future Fund Board is responsible for deciding how to invest the Asset Recycling Fund.
Investments of the Asset Recycling Fund will consist of financial assets.
The Future Fund Board is bound by an Asset Recycling Fund Investment Mandate given to it by the responsible Ministers.
Note: The Future Fund Act 2006 provides that the Future Fund Management Agency is responsible for assisting and advising the Future Fund Board.
4 Definitions
In this Act:
acquire includes acquire by way of issue.
Agency means the Future Fund Management Agency.
Appropriation Act means an Act appropriating money for expenditure out of the Consolidated Revenue Fund.
asset means:
(a) any kind of real or personal property; or
(b) any legal or equitable estate or interest in real or personal property; or
(c) any legal or equitable right.
Asset Recycling Fund means the Asset Recycling Fund established by section 11.
Asset Recycling Fund Infrastructure Special Account means the Asset Recycling Fund Infrastructure Special Account established by section 22.
Asset Recycling Fund investment function of the Future Fund Board means:
(a) a function or power conferred on the Future Fund Board by section 33, 35, 41, 43, 45 or 46; or
(b) a right or power conferred on the Future Fund Board in its capacity as the holder of an investment of the Asset Recycling Fund.
Asset Recycling Fund Investment Mandate has the meaning given by subsection 36(4).
Asset Recycling Fund Special Account means the Asset Recycling Fund Special Account established by section 12.
balance of the Asset Recycling Fund means the sum of:
(a) amounts standing to the credit of the Asset Recycling Fund Special Account; and
(b) the value of investments of the Asset Recycling Fund.
bank has the same meaning as in the Financial Management and Accountability Act 1997.
Building Australia Fund means the Building Australia Fund established by section 12 of the Nation‑building Funds Act 2008.
Building Australia Fund Special Account means the Building Australia Fund Special Account established by section 13 of the Nation‑building Funds Act 2008.
business entity means:
(a) a company; or
(b) a partnership; or
(c) a trust; or
(d) a body politic.
Chair means the Chair of the Future Fund Board.
COAG Reform Fund means the COAG Reform Fund established by section 5 of the COAG Reform Fund Act 2008.
derivative means a derivative (within the meaning of Chapter 7 of the Corporations Act 2001) that is a financial asset.
Education Investment Fund means the Education Investment Fund established by section 131 of the Nation‑building Funds Act 2008.
Education Investment Fund Special Account means the Education Investment Fund Special Account established by section 132 of the Nation‑building Funds Act 2008.
Finance Department means the Department administered by the Finance Minister.
Finance Minister has the same meaning as in the Financial Management and Accountability Act 1997.
financial asset has the same meaning as in the Nation‑building Funds Act 2008.
Future Fund Board means the Future Fund Board of Guardians.
Future Fund Special Account means the Future Fund Special Account established by section 12 of the Future Fund Act 2006.
Infrastructure Department means the Department administered by the Infrastructure Minister.
Infrastructure Minister means the Minister who administers the Infrastructure Australia Act 2008.
infrastructure national partnership grant means a grant of financial assistance to a State or Territory to:
(a) support the delivery by the State or Territory of specified infrastructure outputs or infrastructure projects; or
(b) facilitate reforms relating to infrastructure by the State or Territory; or
(c) reward the State or Territory for nationally significant reforms relating to infrastructure.
infrastructure payment means a payment of an amount to a person (other than a State), under an agreement between the person and the Commonwealth, to:
(a) support the delivery by the person of specified infrastructure outputs or infrastructure projects; or
(b) facilitate reforms relating to infrastructure by the person; or
(c) reward the person for reforms relating to infrastructure.
investment means any mode of application of money or financial assets for the purpose of gaining a return (whether by way of income, capital gain or any other form of return).
investment manager means a person or body (other than the Agency) who undertakes to do any or all of the following:
(a) invest amounts on behalf of the Future Fund Board;
(b) manage the investment of funds on behalf of the Future Fund Board;
(c) acquire derivatives on behalf of the Future Fund Board;
(d) manage derivatives on behalf of the Future Fund Board;
(e) enter into securities lending arrangements on behalf of the Future Fund Board;
(f) realise financial assets on behalf of the Future Fund Board;
(g) perform custodial functions in relation to the financial assets of the Future Fund Board.
investment of the Asset Recycling Fund means a financial asset that, under a provision of this Act, is taken to be an investment of the Asset Recycling Fund.
National Partnership Agreement on Asset Recycling means the National Partnership Agreement on Asset Recycling agreed to by the Council of Australian Governments on 2 May 2014, as amended from time to time.
National Partnership Agreement on Land Transport Infrastructure Projects means the National Partnership Agreement on Land Transport Infrastructure Projects between the Commonwealth, the States and the Territories that took effect on 1 July 2014, as amended from time to time.
person includes a partnership.
Note: See also subsection 2C(1) of the Acts Interpretation Act 1901.
realise includes redeem or dispose of.
responsible Ministers means:
(a) the Treasurer; and
(b) the Finance Minister.
rules means rules made under section 59.
securities lending arrangement means an agreement of the kind known as a securities lending arrangement.
Treasury Department means the Department administered by the Treasurer.
value, of an investment of the Asset Recycling Fund, means the market value of the investment. For this purpose, disregard anything that would prevent or restrict conversion of a financial asset to money.
5 Crown to be bound
(1) This Act binds the Crown in each of its capacities.
(2) This Act does not make the Crown liable to be prosecuted for an offence.
6 Extension to external Territories
This Act extends to every external Territory.
7 Extra‑territorial application
This Act extends to acts, omissions, matters and things outside Australia.
8 Alternative constitutional basis
(1) Without limiting its effect apart from this section, this Act also has effect in relation to the making of infrastructure payments as provided by this section.
(2) This Act also has the effect it would have if its operation in relation to the making of infrastructure payments were expressly confined to an operation limited to the making of infrastructure payments that relate to infrastructure outputs, projects or reforms in connection with trade or commerce:
(a) between Australia and other countries; or
(b) among the States; or
(c) between Territories or between a Territory and a State.
(3) This Act also has the effect it would have if its operation in relation to the making of infrastructure payments were expressly confined to an operation limited to infrastructure payments:
(a) to be made to a corporation to which paragraph 51(xx) of the Constitution applies; or
(b) that relate to infrastructure outputs, projects or reforms in connection with infrastructure that is, or is to be, owned or operated by a corporation to which paragraph 51(xx) of the Constitution applies.
(4) This Act also has the effect it would have if its operation in relation to the making of infrastructure payments were expressly confined to an operation limited to infrastructure payments that relate to infrastructure outputs, projects or reforms in connection with infrastructure that would enable or assist a corporation to which paragraph 51(xx) of the Constitution applies to carry on its business.
(5) This Act also has the effect it would have if its operation in relation to the making of infrastructure payments were expressly confined to an operation limited to the making of infrastructure payments:
(a) in relation to a Territory government; or
(b) in relation to infrastructure outputs, projects or reforms in a Territory.
(6) This Act also has the effect it would have if its operation in relation to the making of infrastructure payments were expressly confined to an operation limited to the making of infrastructure payments that relate to infrastructure outputs, projects or reforms that are, or are to be, in places acquired by the Commonwealth for public purposes.
(7) This Act also has the effect it would have if its operation in relation to the making of infrastructure payments were expressly confined to an operation limited to the making of infrastructure payments that relate to infrastructure outputs, projects or reforms in connection with purposes related to railway acquisition, construction or extension in a State with the consent of the State.
(8) This Act also has the effect it would have if its operation in relation to the making of infrastructure payments were expressly confined to an operation limited to the making of infrastructure payments that relate to infrastructure outputs, projects or reforms in connection with external affairs.
(9) This Act also has the effect it would have if its operation in relation to the making of infrastructure payments were expressly confined to an operation limited to the making of infrastructure payments that relate to infrastructure outputs, projects or reforms that relate to the defence of Australia.
(10) This Act also has the effect it would have if its operation in relation to the making of infrastructure payments were expressly confined to an operation limited to the making of infrastructure payments in so far as it is appropriate for the payments to be provided by the Commonwealth as the national Government of Australia under the executive powers of the Commonwealth.
9 Object
The object of this Act is to enhance the Commonwealth’s ability:
(a) to transfer amounts to the COAG Reform Fund in order to make grants of financial assistance to the States and Territories for expenditure incurred under the National Partnership Agreement on Asset Recycling; and
(b) to transfer amounts to the COAG Reform Fund in order to make grants of financial assistance to the States and Territories for expenditure incurred under the National Partnership Agreement on Land Transport Infrastructure Projects; and
(c) to transfer amounts to the COAG Reform Fund in order to make infrastructure national partnership grants; and
(d) to transfer amounts to the Asset Recycling Fund Infrastructure Special Account to enable the making of infrastructure payments.
Part 2—Asset Recycling Fund
Division 1—Introduction
10 Simplified outline of this Part
This Part sets up the Asset Recycling Fund, consisting of:
(a) the Asset Recycling Fund Special Account; and
(b) the investments of the Asset Recycling Fund.
The responsible Ministers may determine that amounts are to be credited to the Asset Recycling Fund Special Account.
Amounts may be debited from the Asset Recycling Fund Special Account in accordance with its purposes.
The main purposes of the Asset Recycling Fund Special Account are the same as the object of this Act.
Other purposes relate to paying or discharging particular costs, expenses and obligations.
The Finance Minister is responsible for authorising debits (the amounts of which will be credited to the COAG Reform Fund or the Asset Recycling Fund Infrastructure Special Account) on the recommendation of another Minister (usually the Treasurer or the Infrastructure Minister).
Division 2—Establishment of the Asset Recycling Fund etc.
11 Establishment of the Asset Recycling Fund
(1) The Asset Recycling Fund is established by this section.
(2) The Fund consists of:
(a) the Asset Recycling Fund Special Account; and
(b) the investments of the Asset Recycling Fund.
12 Establishment of the Asset Recycling Fund Special Account
(1) The Asset Recycling Fund Special Account is established by this section.
(2) The Asset Recycling Fund Special Account is a Special Account for the purposes of the Financial Management and Accountability Act 1997.
Note: An Appropriation Act may contain a provision to the effect that, if any of the purposes of a Special Account is a purpose that is covered by an item in the Appropriation Act (whether or not the item expressly refers to the Special Account), then amounts may be debited against the appropriation for that item and credited to that Special Account.
Division 3—Credits of amounts to the Asset Recycling Fund
13 Initial credits to Special Account
Building Australia Fund amount
(1) On the commencement of this section:
(a) there is to be credited to the Asset Recycling Fund Special Account an amount equal to the lesser of:
(i) $2.4 billion; or
(ii) the balance of the Building Australia Fund Special Account as at immediately before the commencement of this section; and
(b) the Building Australia Fund Special Account is to be debited an amount equal to the amount credited under paragraph (a).
Note: See also subsection 34(1), which is about allocation of investments to the Asset Recycling Fund from the Building Australia Fund.
Education Investment Fund amount
(2) On the commencement of this section:
(a) there is to be credited to the Asset Recycling Fund Special Account an amount equal to the lesser of:
(i) $3.5 billion; or
(ii) the balance of the Education Investment Fund Special Account as at immediately before the commencement of this section; and
(b) the Education Investment Fund Special Account is to be debited an amount equal to the amount credited under paragraph (a).
Note: See also subsection 34(4), which is about allocation of investments to the Asset Recycling Fund from the Education Investment Fund.
14 Subsequent credits of amounts
(1) The responsible Ministers may, by writing, determine that:
(a) a specified amount is to be credited to the Asset Recycling Fund Special Account on a specified day; or
(b) a specified amount is to be credited to the Asset Recycling Fund Special Account in specified instalments on specified days.
Note: For variation and revocation, see subsection 33(3) of the Acts Interpretation Act 1901.
(2) In making a determination under subsection (1), the responsible Ministers must have regard to the object of this Act.
(3) A determination under subsection (1) is a legislative instrument, but section 42 (disallowance) of the Legislative Instruments Act 2003 does not apply to the determination.
Division 4—Debits of amounts from the Asset Recycling Fund, etc.
Subdivision A—Purposes
15 Purposes of the Asset Recycling Fund Special Account—main purposes
Each of the following is a purpose of the Asset Recycling Fund Special Account:
(a) to transfer amounts to the COAG Reform Fund in order to make grants of financial assistance to the States and Territories for expenditure incurred under the National Partnership Agreement on Asset Recycling;
(b) to transfer amounts to the COAG Reform Fund in order to make grants of financial assistance to the States and Territories for expenditure incurred under the National Partnership Agreement on Land Transport Infrastructure Projects;
(c) to transfer amounts to the COAG Reform Fund in order to make infrastructure national partnership grants;
(d) to transfer amounts to the Asset Recycling Fund Infrastructure Special Account to enable the making of infrastructure payments.
16 Purposes of the Asset Recycling Fund Special Account—purposes related exclusively to the investments etc. of the Asset Recycling Fund
Each of the following is a purpose of the Asset Recycling Fund Special Account:
(a) paying the costs of, or incidental to, the acquisition of financial assets under section 33;
(b) paying expenses of an investment of the Asset Recycling Fund;
(c) paying the costs of, or incidental to, the acquisition of derivatives under section 43;
(d) paying or discharging the costs, expenses and other obligations incurred by the Future Fund Board under a contract between the Future Fund Board and an investment manager engaged under subsection 46(1);
(e) paying or discharging the costs, expenses and other obligations incurred in connection with the establishment, maintenance or operation of a bank account of the Future Fund Board, if the bank account relates exclusively to the Asset Recycling Fund;
(f) paying a premium in respect of a contract of insurance entered into by the Future Fund Board exclusively in connection with the Asset Recycling Fund;
(g) paying or discharging any other costs, expenses, obligations or liabilities incurred by the Future Fund Board exclusively in connection with the Asset Recycling Fund.
Note: See section 21 of the Financial Management and Accountability Act 1997 (debits from Special Accounts).
17 Purposes of the Asset Recycling Fund Special Account—purposes not related exclusively to the Asset Recycling Fund
Each of the following is a purpose of the Asset Recycling Fund Special Account:
(a) paying or discharging the costs, expenses and other obligations incurred in connection with the establishment, maintenance or operation of a bank account of the Future Fund Board, if those costs, expenses or obligations are not covered by:
(i) paragraph 16(e); or
(ii) paragraph 2(1)(g) of Schedule 2 to the Future Fund Act 2006; or
(iii) paragraph 18(1)(j) of the Nation‑building Funds Act 2008; or
(iv) paragraph 136(1)(j) of the Nation‑building Funds Act 2008; or
(v) paragraph 137(e) of the Nation‑building Funds Act 2008; or
(vi) paragraph 218(1)(f) of the Nation‑building Funds Act 2008; or
(vii) paragraph 16(1)(a) of the DisabilityCare Australia Fund Act 2013;
(b) paying a premium in respect of a contract of insurance entered into by the Future Fund Board, if the premium is not covered by:
(i) paragraph 16(f); or
(ii) paragraph 2(1)(h) of Schedule 2 to the Future Fund Act 2006; or
(iii) paragraph 18(1)(k) of the Nation‑building Funds Act 2008; or
(iv) paragraph 136(1)(k) of the Nation‑building Funds Act 2008; or
(v) paragraph 137(f) of the Nation‑building Funds Act 2008; or
(vi) paragraph 218(1)(g) of the Nation‑building Funds Act 2008; or
(vii) paragraph 16(1)(b) of the DisabilityCare Australia Fund Act 2013;
(c) paying or discharging any other costs, expenses, obligations or liabilities incurred by the Future Fund Board, if the costs, expenses, obligations or liabilities are not covered by:
(i) a paragraph of section 16; or
(ii) a paragraph of subclause 2(1) of Schedule 2 to the Future Fund Act 2006; or
(iii) a paragraph of subsection 18(1) of the Nation‑building Funds Act 2008; or
(iv) a paragraph of subsection 136(1) of the Nation‑building Funds Act 2008; or
(v) a paragraph of section 137 of the Nation‑building Funds Act 2008; or
(vi) a paragraph of subsection 218(1) of the Nation‑building Funds Act 2008; or
(vii) paragraph 16(1)(c) of the DisabilityCare Australia Fund Act 2013;
(d) paying remuneration and allowances of Future Fund Board members;
(e) paying remuneration, and other employment‑related costs and expenses, in respect of members of the staff of the Agency;
(f) paying or discharging the costs, expenses and other obligations incurred by the Commonwealth under a contract entered into under section 78 or 82 of the Future Fund Act 2006;
(g) paying or discharging the costs, expenses and other obligations incurred by the Commonwealth in connection with the operation of the Agency.
Note: See section 21 of the Financial Management and Accountability Act 1997 (debits from Special Accounts).
Subdivision B—Grants channelling through COAG Reform Fund
18 Channelling of State/Territory grants payments through the COAG Reform Fund
(1) The Finance Minister may, by writing, direct that a specified amount is to be:
(a) debited from the Asset Recycling Fund Special Account; and
(b) credited to the COAG Reform Fund;
on a specified day.
(2) The direction must be expressed to be given in order to enable the amount to be debited from the COAG Reform Fund for the purpose of making:
(a) a specified grant of financial assistance to the States and Territories for:
(i) expenditure incurred under the National Partnership Agreement on Asset Recycling; or
(ii) expenditure incurred under the National Partnership Agreement on Land Transport Infrastructure Projects; or
(b) a specified infrastructure national partnership grant.
(3) Two or more directions under subsection (1) may be set out in the same document.
(4) A direction under subsection (1) is not a legislative instrument.
(5) The Finance Minister must give a copy of a direction under subsection (1) to the Minister who recommended the specification of the grant (see section 19).
19 Recommendations about grants payments
(1) A grant must not be specified under subparagraph 18(2)(a)(i) unless the Treasurer has recommended the specification of the grant.
(2) A grant must not be specified under subparagraph 18(2)(a)(ii) unless the Infrastructure Minister has recommended the specification of the grant.
(3) A grant must not be specified under paragraph 18(2)(b) unless a Minister (other than the Finance Minister) has recommended the specification of the grant.
20 Debit from the COAG Reform Fund
Scope
(1) This section applies if:
(a) the Finance Minister gives a direction under subsection 18(1) for a purpose in relation to a grant of financial assistance to a State or Territory; and
(b) the amount specified in the direction is credited to the COAG Reform Fund.
Debit from the COAG Reform Fund
(2) The Treasurer must ensure that, as soon as practicable after the amount is credited, the COAG Reform Fund is debited for the purposes of making the grant.
(3) However, if the debit from the COAG Reform Fund cannot be made, an amount equal to the credited amount is to be:
(a) debited from the COAG Reform Fund; and
(b) credited to the Asset Recycling Fund Special Account.
21 Grant to a State or Territory
Scope
(1) This section applies if:
(a) an amount is to be debited from the COAG Reform Fund for the purpose of:
(i) making a grant of financial assistance to a State or Territory for expenditure incurred under the National Partnership Agreement on Asset Recycling or under the National Partnership Agreement on Land Transport Infrastructure Projects; or
(ii) making an infrastructure national partnership grant; and
(b) the grant is covered by subsection 20(2).
Note: Subsection 20(2) deals with grants channelled through the COAG Reform Fund.
Terms and conditions
(2) The terms and conditions on which that financial assistance is granted are to be set out in a written agreement between the Commonwealth and the State or Territory.
(3) An agreement under subsection (2) may be entered into by a Minister on behalf of the Commonwealth.
Subdivision C—Payments channelling through the Asset Recycling Fund Infrastructure Special Account
22 Establishment of the Asset Recycling Fund Infrastructure Special Account
(1) The Asset Recycling Fund Infrastructure Special Account is established by this section.
(2) The Asset Recycling Fund Infrastructure Special Account is a Special Account for the purposes of the Financial Management and Accountability Act 1997.
Note: An Appropriation Act may contain a provision to the effect that, if any of the purposes of a Special Account is a purpose that is covered by an item in the Appropriation Act (whether or not the item expressly refers to the Special Account), then amounts may be debited against the appropriation for that item and credited to that Special Account.
23 Purpose of the Asset Recycling Fund Infrastructure Special Account
(1) The purpose of the Asset Recycling Fund Infrastructure Special Account is to enable the making of infrastructure payments, if the payments are specified under subsection 24(1).
Note: See section 21 of the Financial Management and Accountability Act 1997 (debits from Special Accounts).
(2) A payment under subsection (1) may be made:
(a) by way of a grant of financial assistance; or
(b) otherwise.
24 Channelling of payments through the Asset Recycling Fund Infrastructure Special Account
(1) The Finance Minister may, by writing, direct that a specified amount is to be:
(a) debited from the Asset Recycling Fund Special Account; and
(b) credited to the Asset Recycling Fund Infrastructure Special Account;
on a specified day.
(2) The direction must be expressed to be given in order to enable the specified amount to be debited from the Asset Recycling Fund Infrastructure Special Account for the purpose of enabling the making of infrastructure payments.
(3) Two or more directions under subsection (1) may be set out in the same document.
(4) A direction under subsection (1) is not a legislative instrument.
(5) The Finance Minister must give a copy of a direction under subsection (1) to the Infrastructure Minister.
25 Recommendations about payments
A payment must not be specified under subsection 24(1) unless the Infrastructure Minister has recommended the specification of the payment.
26 Payments—debit from the Asset Recycling Fund Infrastructure Special Account
Scope
(1) This section applies if:
(a) the Finance Minister gives a direction under subsection 24(1) for a purpose in relation to a payment; and
(b) the amount specified in the direction is credited to the Asset Recycling Fund Infrastructure Special Account.
Debit from the Asset Recycling Fund Infrastructure Special Account
(2) The Infrastructure Minister must ensure that, as soon as practicable after the amount is credited, the Asset Recycling Fund Infrastructure Special Account is debited for the purposes of making the payment.
(3) However, if the payment cannot be made, an amount equal to the credited amount is to be:
(a) debited from the Asset Recycling Fund Infrastructure Special Account; and
(b) credited to the Asset Recycling Fund Special Account.
27 Grant to a person other than a State
Scope
(1) This section applies if:
(a) an amount is to be debited from the Asset Recycling Fund Infrastructure Special Account for the purpose of enabling the making of infrastructure payments; and
(b) the payment is by way of a grant of financial assistance.
Terms and conditions
(2) The terms and conditions on which that financial assistance is granted are to be set out in a written agreement between the Commonwealth and the person who is to receive the payment by way of the grant under the agreement.
(3) An agreement under subsection (2) may be entered into by the Infrastructure Minister on behalf of the Commonwealth.
28 Payment to a person other than a State
Scope
(1) This section applies if:
(a) an amount is to be debited from the Asset Recycling Fund Infrastructure Special Account for the purpose of enabling the making of infrastructure payments; and
(b) the payment is otherwise than by way of a grant of financial assistance.
Terms and conditions
(2) The terms and conditions on which that payment is paid are to be set out in a written agreement between the Commonwealth and the person who is to receive the payment under the agreement.
(3) An agreement under subsection (2) may be entered into by the Infrastructure Minister on behalf of the Commonwealth.
Subdivision D—Obligation to ensure sufficient money
29 Future Fund Board must ensure that there is sufficient money in the Asset Recycling Fund Special Account to cover authorised debits etc.
The Future Fund Board must take all reasonable steps to ensure that the amount of money standing to the credit of the Asset Recycling Fund Special Account is sufficient to cover the debit of amounts authorised, or proposed to be authorised, under this Part.
Note: This may require the Future Fund Board to realise an investment of the Asset Recycling Fund in accordance with section 35.
Division 5—Inter‑fund transfers
30 Transfers from the Asset Recycling Fund to the Future Fund
(1) If an amount is debited from the Future Fund Special Account for a purpose mentioned in subclause 2(2) of Schedule 2 to the Future Fund Act 2006, the Finance Minister may, by writing, direct that a specified amount is to be:
(a) debited from the Asset Recycling Fund Special Account; and
(b) credited to the Future Fund Special Account;
on a specified day.
(2) The specified amount must not exceed the amount debited from the Future Fund Special Account as mentioned in subsection (1).
(3) A direction under subsection (1) is not a legislative instrument.
Part 3—Investment of the Asset Recycling Fund
31 Simplified outline of this Part
The Future Fund Board is responsible for deciding how to invest the Asset Recycling Fund.
Investments of the Asset Recycling Fund will consist of financial assets.
Investments of the Asset Recycling Fund will be held in the name of the Future Fund Board.
The Future Fund Board is bound by an Asset Recycling Fund Investment Mandate given to it by the responsible Ministers.
32 Objects of investment of the Asset Recycling Fund
(1) The main objects of the acquisition by the Future Fund Board of a financial asset as an investment of the Asset Recycling Fund are to enhance the Commonwealth’s ability:
(a) to transfer amounts to the COAG Reform Fund in order to make grants of financial assistance to the States and Territories for expenditure incurred under the National Partnership Agreement on Asset Recycling; and
(b) to transfer amounts to the COAG Reform Fund in order to make grants of financial assistance to the States and Territories for expenditure incurred under the National Partnership Agreement on Land Transport Infrastructure Projects; and
(c) to transfer amounts to the COAG Reform Fund in order to make infrastructure national partnership grants; and
(d) to transfer amounts to the Asset Recycling Fund Infrastructure Special Account to enable the making of infrastructure payments.
(2) The ancillary objects of the acquisition by the Future Fund Board of a financial asset as an investment of the Asset Recycling Fund are to enhance the ability of the Commonwealth and the Future Fund Board to:
(a) discharge costs, expenses, obligations and liabilities; and
(b) make payments;
as mentioned in paragraphs 16(a) to (g) and 17(a) to (g).
33 Investment of the Asset Recycling Fund
(1) The Future Fund Board may invest amounts standing to the credit of the Asset Recycling Fund Special Account in any financial assets.
(2) Investments under subsection (1) are to be made in the name of the Future Fund Board.
(3) Investments under subsection (1) are taken to be investments of the Asset Recycling Fund.
(4) This section does not authorise the acquisition of a derivative.
Note: For acquisition of derivatives, see section 43.
34 Allocation of investments to the Asset Recycling Fund
From the Building Australia Fund
(1) Subsection (2) applies if the amount transferred to the Asset Recycling Fund Special Account under subsection 13(1) is less than $2.4 billion.
(2) On the day that this section commences:
(a) the Future Fund Board must:
(i) determine the balance of the Asset Recycling Fund following the transfer under subsection 13(1); and
(ii) determine, by writing, sufficient financial assets that were, immediately before commencement, investments of the Building Australia Fund that are to be allocated from that Fund to the Asset Recycling Fund, to ensure that the portion of the balance of the Asset Recycling Fund allocated from the Building Australia Fund will equal $2.4 billion; and
(b) immediately after the determination under subparagraph (a)(ii) is made, the relevant financial assets are taken to cease to be investments of the Building Australia Fund and to become investments of the Asset Recycling Fund.
(3) A determination made under subparagraph (2)(a)(ii) is not a legislative instrument.
From the Education Investment Fund
(4) Subsection (5) applies if the amount transferred to the Asset Recycling Fund Special Account under subsection 13(2) is less than $3.5 billion.
(5) On the day that this section commences:
(a) the Future Fund Board must:
(i) determine the balance of the Asset Recycling Fund following the transfer under subsection 13(2); and
(ii) determine, by writing, sufficient financial assets that were, immediately before commencement, investments of the Education Investment Fund that are to be allocated from that Fund to the Asset Recycling Fund, to ensure that the portion of the balance of the Asset Recycling Fund allocated from the Education Investment Fund will equal $3.5 billion; and
(b) immediately after the determination under subparagraph (a)(ii) is made, the relevant financial assets are taken to cease to be investments of the Education Investment Fund and to become investments of the Asset Recycling Fund.
(6) A determination made under subparagraph (5)(a)(ii) is not a legislative instrument.
35 Management of investments of the Asset Recycling Fund
(1) Income derived from an investment of the Asset Recycling Fund is to be credited to the Asset Recycling Fund Special Account.
(2) A return of capital, or any other financial distribution, relating to an investment of the Asset Recycling Fund is to be credited to the Asset Recycling Fund Special Account.
(3) The Future Fund Board may realise an investment of the Asset Recycling Fund.
(4) Upon realisation of an investment of the Asset Recycling Fund, the proceeds of the investment are to be credited to the Asset Recycling Fund Special Account.
(5) At any time before an investment of the Asset Recycling Fund matures, the Future Fund Board may authorise the re‑investment of the proceeds upon maturity in a financial asset investment with the same entity. The new investment is taken to be an investment of the Asset Recycling Fund.
(6) Section 39 of the Financial Management and Accountability Act 1997 does not apply to an investment of the Asset Recycling Fund.
36 Asset Recycling Fund Investment Mandate
(1) The responsible Ministers may give the Future Fund Board written directions about the performance of its Asset Recycling Fund investment functions, and must give at least one such direction.
Note 1: Asset Recycling Fund investment function is defined in section 4.
Note 2: For variation and revocation, see subsection 33(3) of the Acts Interpretation Act 1901.
(2) Subsection (1) has effect subject to section 37.
(3) In giving a direction under subsection (1), the responsible Ministers must have regard to:
(a) maximising the return earned on the Asset Recycling Fund, consistent with international best practice for institutional investment; and
(b) enhancing the Commonwealth’s ability to fulfil the object of this Act; and
(c) such other matters as the responsible Ministers consider relevant.
(4) Directions under subsection (1) are to be known collectively as the Asset Recycling Fund Investment Mandate.
(5) A direction under subsection (1) may set out the policies to be pursued by the Future Fund Board in relation to:
(a) matters of risk and return; and
(b) the allocation of financial assets.
A policy relating to the allocation of financial assets must not be inconsistent with a policy relating to matters of risk and return.
(6) Subsection (5) does not limit subsection (1).
(7) Subsection (5) has effect subject to section 37.
(8) The Asset Recycling Fund Investment Mandate prevails over subsection (12) to the extent of any inconsistency.
(9) The responsible Ministers must not give a direction under subsection (1) that is inconsistent with this Act (other than subsection (12)).
(10) A direction under subsection (1) must not take effect before the 15th day after the day on which it is given.
(11) A direction under subsection (1) is a legislative instrument.
Note 1: Section 42 (disallowance) of the Legislative Instruments Act 2003 does not apply to the direction—see section 44 of that Act.
Note 2: Part 6 (sunsetting) of the Legislative Instruments Act 2003 does not apply to the direction—see section 54 of that Act.
(12) In the performance of its Asset Recycling Fund investment functions, the Future Fund Board must seek to:
(a) maximise the return earned on the Asset Recycling Fund, consistent with international best practice for institutional investment; and
(b) enhance the Commonwealth’s ability to fulfil the object of this Act.
Note: Asset Recycling Fund investment function is defined in section 4.
(13) Subsection (12) has effect subject to:
(a) this Act; and
(b) a direction under subsection (1).
37 Limitation on Asset Recycling Fund Investment Mandate
(1) The responsible Ministers must not give a direction under subsection 36(1) that has the purpose, or has or is likely to have the effect, of directly or indirectly requiring the Future Fund Board to:
(a) invest an amount standing to the credit of the Asset Recycling Fund Special Account in a particular financial asset; or
(b) acquire a particular derivative; or
(c) allocate financial assets to:
(i) a particular business entity; or
(ii) a particular activity; or
(iii) a particular business.
(2) Paragraphs (1)(a) and (b) do not limit paragraph (1)(c).
38 Future Fund Board to be consulted on Asset Recycling Fund Investment Mandate
(1) Before giving the Future Fund Board a direction under subsection 36(1), the responsible Ministers must:
(a) send a draft of the direction to the Future Fund Board; and
(b) invite the Future Fund Board to make a submission to the responsible Ministers on the draft direction within a time limit specified by the responsible Ministers; and
(c) consider any submission that is received from the Future Fund Board within that time limit.
(2) If:
(a) the responsible Ministers give the Future Fund Board a direction under subsection 36(1); and
(b) the Future Fund Board made a submission to the responsible Ministers on a draft of the direction within the time limit specified by the responsible Ministers;
the submission is to be tabled in each House of the Parliament with the direction.
Note: For tabling of the direction, see section 38 of the Legislative Instruments Act 2003.
(3) A time limit specified under this section must be reasonable.
39 Compliance with Asset Recycling Fund Investment Mandate
(1) The Future Fund Board must take all reasonable steps to comply with the Asset Recycling Fund Investment Mandate.
(2) As soon as practicable after the Future Fund Board becomes aware that it has failed to comply with the Asset Recycling Fund Investment Mandate, the Future Fund Board must give the responsible Ministers a written statement:
(a) informing the responsible Ministers of the failure to comply with the Asset Recycling Fund Investment Mandate; and
(b) setting out the action that the Future Fund Board proposes to take in order to comply with the Asset Recycling Fund Investment Mandate.
(3) If the responsible Ministers are satisfied that the Future Fund Board has failed to comply with the Asset Recycling Fund Investment Mandate, the responsible Ministers may, by written notice given to the Future Fund Board, direct the Future Fund Board:
(a) to give the responsible Ministers, within a period specified in the notice, a written explanation for the failure to comply with the Asset Recycling Fund Investment Mandate; and
(b) to take action specified in the notice, within a period specified in the notice, in order to comply with the Asset Recycling Fund Investment Mandate.
(4) The Future Fund Board must comply with a direction under subsection (3).
(5) A failure to comply with:
(a) the Asset Recycling Fund Investment Mandate; or
(b) a direction under subsection (3);
does not affect the validity of any transaction.
(6) A direction under subsection (3) is not a legislative instrument.
40 Future Fund Board must not trigger the takeover provisions of the Corporations Act 2001
(1) Subsections 606(1A) and (2A) and section 611 of the Corporations Act 2001 do not apply to an acquisition by the Future Fund Board if the acquisition is the result of the performance by the Future Fund Board of its Asset Recycling Fund investment functions.
(2) A failure by the Future Fund Board to comply with section 606 of the Corporations Act 2001 (as modified by this section) does not affect the validity of any transaction.
Note: See also section 39 of the Future Fund Act 2006 (application of the Corporations Act 2001).
41 Borrowing
(1) The Future Fund Board must not borrow money for a purpose in connection with the Asset Recycling Fund unless the borrowing is authorised by subsection (2) or (3).
(2) The Future Fund Board is authorised to borrow money for a purpose in connection with the Asset Recycling Fund if:
(a) the purpose of the borrowing is to enable the Future Fund Board to cover settlement of a transaction for the acquisition of one or more financial assets; and
(b) at the time the relevant acquisition decision was made, it was likely that the borrowing would not be needed; and
(c) the period of the borrowing does not exceed 7 days; and
(d) if the borrowing were to take place, the total amount borrowed by the Future Fund Board would not exceed 10% of the balance of the Asset Recycling Fund.
(3) The Future Fund Board is authorised to borrow money for a purpose in connection with the Asset Recycling Fund if the borrowing takes place in such circumstances (if any) as are specified in the rules.
42 Asset Recycling Fund investment policies
(1) The Future Fund Board must formulate written policies to be complied with by it in relation to the following matters in connection with the Asset Recycling Fund:
(a) the investment strategy for the Asset Recycling Fund;
(b) benchmarks and standards for assessing the performance of the Asset Recycling Fund;
(c) risk management for the Asset Recycling Fund;
(d) a matter relating to international best practice for institutional investment;
(e) a matter specified in the rules.
Note: For variation and revocation, see subsection 33(3) of the Acts Interpretation Act 1901.
(2) The Future Fund Board must ensure that policies formulated under subsection (1) are consistent with the Asset Recycling Fund Investment Mandate.
Publication of policies
(3) The Future Fund Board must cause copies of policies formulated under subsection (1) to be published on the internet.
(4) The Future Fund Board must ensure that a copy of the first set of policies formulated under subsection (1) is published on the internet as soon as practicable after the commencement of this section.
Review of policies
(5) The Future Fund Board must conduct periodic reviews of policies formulated under subsection (1).
(6) If there is a change in the Asset Recycling Fund Investment Mandate, the Future Fund Board must review any relevant policies formulated under subsection (1).
Compliance with policies
(7) The Future Fund Board must take all reasonable steps to comply with policies formulated under subsection (1).
(8) A failure to comply with a policy formulated under subsection (1) does not affect the validity of any transaction.
Policies
(9) A policy formulated under subsection (1) is not a legislative instrument.
43 Derivatives
(1) The Future Fund Board may acquire a derivative for the purpose of:
(a) protecting the value of an investment of the Asset Recycling Fund (other than a derivative); or
(b) protecting the return on an investment of the Asset Recycling Fund (other than a derivative); or
(c) achieving indirect exposure to financial assets (other than derivatives) for a purpose in connection with the Asset Recycling Fund; or
(d) achieving transactional efficiency for a purpose in connection with the Asset Recycling Fund;
but must not acquire a derivative for the purpose of:
(e) speculation; or
(f) leverage.
(2) The acquisition of a derivative under subsection (1) of this section must be consistent with the investment strategy embodied in a policy formulated by the Future Fund Board under subsection 42(1).
(3) A derivative acquired under subsection (1) of this section is to be held in the name of the Future Fund Board.
(4) A derivative acquired under subsection (1) of this section is taken to be an investment of the Asset Recycling Fund.
44 Additional financial assets
If, as a result of:
(a) the Future Fund Board’s holding of an investment of the Asset Recycling Fund; or
(b) the exercise of any rights or powers conferred on the Future Fund Board in its capacity as the holder of an investment of the Asset Recycling Fund;
the Future Fund Board becomes the holder of a financial asset, that financial asset is taken to be an investment of the Asset Recycling Fund.
45 Securities lending arrangements
(1) The Future Fund Board may enter into securities lending arrangements for a purpose in connection with the Asset Recycling Fund.
(2) Any money received by the Future Fund Board under a securities lending arrangement entered into under subsection (1) is to be credited to the Asset Recycling Fund Special Account.
(3) To avoid doubt, a securities lending arrangement entered into under subsection (1) may provide for the Future Fund Board to realise an investment of the Asset Recycling Fund.
(4) If, as the result of the operation of a securities lending arrangement entered into under subsection (1), the Future Fund Board becomes the holder of a financial asset, that financial asset is taken to be an investment of the Asset Recycling Fund.
46 Investment managers
(1) The Future Fund Board may engage one or more investment managers for purposes in connection with the Asset Recycling Fund.
(2) The Future Fund Board must not:
(a) invest amounts under subsection 33(1); or
(b) acquire derivatives under subsection 43(1); or
(c) enter into a securities lending arrangement under subsection 45(1); or
(d) realise financial assets that are investments of the Asset Recycling Fund;
unless the Future Fund Board does so:
(e) through an investment manager engaged by the Future Fund Board under subsection (1) of this section; or
(f) in a manner approved, in writing, by the responsible Ministers.
(3) The Future Fund Board must ensure that any investment manager engaged by the Future Fund Board under subsection (1) operates within this Act.
(4) The Future Fund Board must ensure that any investment manager engaged by the Future Fund Board under subsection (1) reports to:
(a) the Future Fund Board; and
(b) the Agency;
on the state of the investments of the Asset Recycling Fund at such times and in such manner as the Future Fund Board determines.
47 Custody of securities
Section 40 of the Financial Management and Accountability Act 1997 does not apply to an investment of the Asset Recycling Fund.
48 Refund of franking credits
If:
(a) the Future Fund Board receives a refund of a tax offset under the Income Tax Assessment Act 1997; and
(b) the tax offset is attributable to an investment of the Asset Recycling Fund;
the refund is to be credited to the Asset Recycling Fund Special Account.
Note 1: See also section 84B of the Future Fund Act 2006.
Note 2: For refunds of tax offsets, see Division 63 of the Income Tax Assessment Act 1997.
49 Realisation of non‑financial assets
(1) If an asset held by the Future Fund Board as an investment of the Asset Recycling Fund ceases to be a financial asset:
(a) the Future Fund Board must realise the asset as soon as practicable after the Future Fund Board becomes aware of the cessation; and
(b) this Act (other than this section) applies in relation to the asset (including in relation to the realisation of the asset) as if the asset had remained a financial asset, and an investment of the Asset Recycling Fund, until the realisation.
(2) If an asset acquired by the Future Fund Board, purportedly as an investment of the Asset Recycling Fund, is not a financial asset:
(a) the Future Fund Board must realise the asset as soon as practicable after the Future Fund Board becomes aware that the asset is not a financial asset; and
(b) this Act (other than this section) applies in relation to the asset (including in relation to the realisation of the asset) as if the asset had been a financial asset, and an investment of the Asset Recycling Fund, from the time of its acquisition by the Future Fund Board until the realisation.
50 Additional function of the Future Fund Board
The functions of the Future Fund Board include the function of investing amounts in accordance with this Act.
Part 4—Reporting obligations etc.
51 Simplified outline of this Part
The Finance Minister may provide reports, documents and other information to Ministers.
The Future Fund Board must keep the responsible Ministers informed of its operations under this Act. It may also be required by the Finance Minister to provide reports and provide information.
52 Finance Minister may require Future Fund Board to prepare reports or give information
Reports
(1) The Finance Minister may, by written notice given to the Future Fund Board, require the Future Fund Board to:
(a) prepare a report about one or more specified matters relating to the performance of the Future Fund Board’s functions under this Act; and
(b) give copies of the report to the Finance Minister within the period specified in the notice.
Information
(2) The Finance Minister may, by written notice given to the Future Fund Board, require the Future Fund Board to:
(a) prepare a document setting out specified information relating to the performance of the Future Fund Board’s functions under this Act; and
(b) give copies of the document to the Finance Minister within the period specified in the notice.
Compliance
(3) The Future Fund Board must comply with a requirement under subsection (1) or (2).
Publication of reports and documents
(4) The Finance Minister may cause to be published (whether on the internet or otherwise):
(a) a report under subsection (1); or
(b) a document under subsection (2).
Reports and documents
(5) A report under subsection (1) is not a legislative instrument.
(6) A document under subsection (2) is not a legislative instrument.
53 Keeping the responsible Ministers informed etc.
(1) The Future Fund Board must keep the responsible Ministers informed of the operations of the Future Fund Board under this Act.
(2) The Future Fund Board must give the Finance Minister such reports, documents and information in relation to those operations as are appropriate.
54 Finance Minister may give reports to other Ministers etc.
The Finance Minister may give a Minister any of the following:
(a) a report under subsection 52(1) or 53(2);
(b) a document under subsection 52(2) or 53(2);
(c) any other information or document obtained by the Finance Minister under this Act.
Part 5—Miscellaneous
55 Simplified outline of this Part
This Part deals with miscellaneous matters, such as delegations and rules.
56 Delegation by the Finance Minister
Department
(1) The Finance Minister may, by writing, delegate any or all of his or her powers under section 14, 18, 24 or 30 to:
(a) the Secretary of the Finance Department; or
(b) an SES employee, or acting SES employee, in the Finance Department.
Note: The expressions SES employee and acting SES employee are defined in section 2B of the Acts Interpretation Act 1901.
(2) In exercising powers under a delegation under subsection (1), the delegate must comply with any directions of the Finance Minister.
Agency
(3) The Finance Minister may, by writing, delegate any or all of his or her powers under section 30 to:
(a) the Chair; or
(b) an SES employee, or acting SES employee, in the Agency.
Note: The expressions SES employee and acting SES employee are defined in section 2B of the Acts Interpretation Act 1901.
(4) In exercising powers under a delegation under subsection (3), the delegate must comply with any directions of the Finance Minister.
57 Delegation by the Treasurer
The Treasurer may, by writing, delegate any or all of his or her functions under section 14 or subsection 20(2) to:
(a) the Secretary of the Treasury Department; or
(b) an SES employee, or acting SES employee, in the Treasury Department.
Note: The expressions SES employee and acting SES employee are defined in section 2B of the Acts Interpretation Act 1901.
58 Delegation by the Infrastructure Minister
The Infrastructure Minister may, by writing, delegate any or all of his or her functions under subsection 26(2) to:
(a) the Secretary of the Infrastructure Department; or
(b) an SES employee, or acting SES employee, in the Infrastructure Department.
Note: The expressions SES employee and acting SES employee are defined in section 2B of the Acts Interpretation Act 1901.
59 Rules
The Finance Minister may, by legislative instrument, make rules prescribing matters:
(a) required or permitted by this Act to be prescribed by the rules; or
(b) necessary or convenient to be prescribed for carrying out or giving effect to this Act.