The statutory governance arrangements for the funds we manage are set out primarily in the Future Fund Act 2006, the Medical Research Future Fund Act 2015, the Aboriginal and Torres Strait Islander Land and Sea Future Fund Act 2018, the DisabilityCare Australia Fund Act 2013
and the Nation-building Funds Act 2008.

This core legislation sets out the roles and responsibilities of the Australian Government and of the Board and the Agency. In addition, the Public Governance, Performance and Accountability Act 2013 applies to the Agency and (to a limited extent) the Board and, together with Commonwealth regulations, guidelines, procedures and orders, establishes arrangements for delegations and authorities, spending and the accounting treatment of costs, liabilities, income and expenses.

The core legislation provides the Australian Government, through the responsible Ministers, with oversight of the funds subject to the arrangements that establish the independence of the Board. The government’s role includes the appointment of Board members and the establishment of investment mandates for each of the funds. The legal framework retains beneficial ownership of the assets of each fund in the Commonwealth. It also clearly states the purpose of each fund and sets out the arrangements for contributions to and withdrawals from the various funds.

The Board is responsible for investing the assets of the funds in accordance with the legislation. To assist it in this role, the Board receives recommendations and advice from the Agency which is also responsible for implementing the Board’s investment decisions.

The Board operates independently from the government. This independence is emphasised in a number of ways, including:

• The expenses of the funds are met from the assets of the funds themselves rather than from annual appropriations through Parliament.
• The Board must be consulted on draft Investment Mandate Directions which must be consistent with the requirements of the legislation, and any submissions the Board makes on a draft Investment Mandate must be tabled in Parliament. The investment mandates for each of the funds define the risk and return requirements and timeframe for investment activity while the legislation imposes very few limitations on asset allocation, selection of markets and portfolio design on the Board.
• Board members must be drawn from outside government and must meet the requirements of having substantial expertise and professional credibility in investing or managing financial assets, or in corporate governance.

The Board is not involved in advising on macroeconomic management or policy formation and implementation and is focused solely on the pursuit of its investment objectives in a commercial manner.

More broadly, we are a founding member of the International Forum of Sovereign Wealth Funds (IFSWF) and fully implement the Santiago Principles. The Santiago Principles promote transparency, good governance, accountability and prudent investment practices whilst encouraging a more open dialogue and deeper understanding of sovereign wealth fund activities.