Jim Chalmers, Katy Gallagher call on Future Fund to help fix Australia’s housing crisis, fund green energy

The Albanese Government is calling on the $230 billion Future Fund to help fix Australia’s housing crisis and invest in green energy and security infrastructure projects.

In updated guidelines to be unveiled Thursday, the Future Fund board has been ordered to consider what the Labor administration describes as “Australia’s national priorities” when assessing potential investments.

Treasurer Jim Chalmers and Public Service Minister Katy Gallagher have added their agendas to the Future Fund mandate while declaring Treasury will not begin drawing down on the national nest-egg until at least 2032-23.

Any potential investments returns remain subject to the Future Fund’s board legal requirement to aim for long term returns averaging 4 per cent to 5 per cent a year, after inflation.

While welcoming the latest mandate, the Future Fund chair Greg Combet emphasised the board’s independence by saying the annual returns target remained its focus.

Mr Combet, a climate change minister under Kevin Rudd and Julia Gillard, said delaying Future Fund withdrawals for at least another five years gave his team the “confidence to provide more focus and resources to the areas of national priority”.

The Future Fund was set up in 2006 by then treasurer Peter Costello to ensure Treasury could cover expected obligations from 2020 onwards under public service superannuation schemes.

The Coalition Government declared in 2017 that fund drawdowns would not begin at least 2026-27 and it lowered the fund’s long-term return target range by 0.5 percentage points from its original mandate.

While sticking with the lowered mandate, the Albanese Government says it will now require the Future Fund board to consider national priorities in investment decisions where “possible, appropriate and consistent with strong returns”.

It describes these priorities as delivering improved “economic resilience and security infrastructure”; supporting the “energy transition as part of the net zero transformation of the Australian economy”; and “increasing the supply of residential housing in Australia”.

Mr Combet said in a statement that the priority areas identified by the Federal Government were consistent with his team’s focus on gaining more Australian dollar exposure and protection against inflation.

“With that certainty we will be able to continue to invest for the long term, make sustainable contributions to the Federal Budget and continue to grow the value of the fund long into the future,” he said.

He pointed to the fund’s investment in green energy group Tilt Renewables and data centre operator and developer CDC, saying it was “continuing to assess opportunities to invest in businesses that will play a vital role in the energy transition”.

The Federal Government has forecast the fund will have $380b of assets by 2022-23 and said there would be no change to the risk profile.