House of Representatives

Explanatory Memorandum

Circulated By Authority of the Minister for Finance and Deregulation, the Honourable Lindsay Tanner Mp

Schedule 2-Amendments

Future Fund Act 2006

The purpose of Schedule 2 is to amend the provisions of the Future Fund Act to extend the Future Fund Act's operation to deal with the Future Fund Board's functions in relation to the BAF, EIF and HHF. The amendments are mostly technical in nature and are consequential to the enactment of the Nation-building Funds Act 2008 and the repeal of the HEEF Act (which would be effected by Schedule 1 to this Bill).

As far as possible, the amendments have been grouped so as to aid readability.

Notes and definitional provisions

Item 1 omits the reference to the HEEF Act in the note at the end of section 4 of the Future Fund Act and replaces it with a reference to the Nation-building Funds Act 2008 . Section 4 provides a simplified outline of the Future Fund Act.

Items 2 to 12 and 17 to 19 insert new definitions into section 5 of the Future Fund Act that reflect various terms proposed to be used in the Nation-building Funds Act 2008 .

Items 13 to 16 repeal various definitions used in the HEEF Act.

Inter-fund transfers

A new Schedule 2A will be added to the Future Fund Act to provide for amounts to be transferred from the Future Fund to the BAF, EIF and HHF. This will be done by Item 44 .

The purpose of this is to cover the situation where one of the BAF, the EIF or the HHF pays for an expense that should properly have been contributed to by the Future Fund. The new Schedule 2A will allow the nominated Minister to direct that a specified amount be debited from the Future Fund and credited to the relevant Fund. Corresponding provisions permitting credits to be made to the Future Fund are to be provided for in the Nation-building Funds Bill 2008.

Items 20 and 21 make amendments of section 13 of the Future Fund Act to reflect the addition of Schedule 2A.

Items 39 and 40 will amend section 84 of the Future Fund Act, which deals with miscellaneous receipts that might have been credited to the Future Fund Account. At present the nominated Minister may specify that an amount relating to that credit is to be transferred to the HEEF. These amendments will remove the present references to the HEEF Act and the HEEF Special Account and substitute references to the Nation-building Funds Act 2008 and the BAF, EIF and HHF Special Accounts.

Item 38 adds a new section 83A to provide for the nominated Minister to delegate his or her powers in relation to transfers (either under Schedule 2A or section 84) to the Secretary of a department or to an SES employee or acting SES employee in a department. This item also adds a new section 83B which is discussed below.

Investment managers

Item 22 substitutes a new subsection 28(5) of the Future Fund Act to make it clear that an investment manager may be engaged by the Future Fund Board in relation to investment activity for two or more of the Funds.

Item 38 adds a new section 83B to provide for the Future Fund Board to delegate the function of engaging investment managers to the Chair of the Future Fund Board or to an SES employee (or acting SES employee) in the Agency. This recognises the increased workload for the Board because of the additional functions it will have in relation to the BAF, the EIF and the HHF.

The Future Fund Board

A number of items amend the Future Fund Act as a consequence of the additional functions to be given to the Board by the Nation-building Funds Bill 2008 and the removal of the functions provided under the HEEF Act.

Item 23 omits the reference to the HEEF Act in the note at the end of section 33 of the Future Fund Act and replaces it with a reference to the Nation-building Funds Act 2008 . Section 33 provides a simplified outline of Part 4 of the Future Fund Act (which deals with the Future Fund Board).

Section 35 of the Future Fund Act sets out the basic functions of the Future Fund Board. Item 24 amends section 35 to remove reference to the functions conferred by the HEEF Act and include reference to the functions conferred by the Nation-building Funds Act 2008 .

Item 25 similarly amends section 55 of the Future Fund Act (which deals with keeping responsible Ministers informed) by omitting the reference to the HEEF Act and including a reference to the Nation-building Funds Act 2008 .

Duties of Future Fund Board members and Agency staff

Items 26 to 28 update sections 60 to 62 of the Future Fund Act to add a reference to a financial penalty for breach of the duties established by those sections. The maximum penalties will now be 'Imprisonment for 5 years or 2000 penalty units.' The penalty unit level reflects that which applies to the corresponding provisions in the Corporations Act. This amendment also reflects amendments recently made to the Commonwealth Authorities and Companies Act 1997 .

Items 29 and 30 amend section 63 of the Future Fund Act by omitting existing references to the HEEF Act and substituting references to the Nation-building Funds Act 2008 .

Item 31 amends section 65 of the Future Fund Act which deals with when it is reasonable for a Future Fund Board member to rely on information. The words proposed to be substituted would include circumstances when a Future Fund Board member makes an independent assessment in good faith and will make the wording consistent with the corresponding provisions of the Corporations Act. This amendment also reflects amendments recently made to the Commonwealth Authorities and Companies Act 1997 .

Annual reports

There are a number of amendments required to be made as a consequence of annual reports having to be provided in relation to the operation of the BAF, EIF and HHF, and no longer being provided in relation to the operation of the HEEF.

Item 32 inserts a heading before subsection 81(1) of the Future Fund Act, which will now deal with reports in relation to the Future Fund Board, the Agency and the Future Fund. Item 33 will omit references to the HEEF and the HEEF Act.

Item 34 will insert new subsections 81(1A) to (1C) that will respectively deal with reporting in relation to the BAF, the EIF and the HHF.

Items 35 and 36 will insert a new heading and subsections providing for specific requirements about the inclusion of certain benchmarks in reports about the BAF, EIF and HHF.

Item 37 will update the list of Ministers to whom the nominated Minister must provide a copy of an annual report.

Debits of amounts from the Future Fund for expenses not exclusively related to that Fund

Paragraph 2 of Schedule 2 to the Future Fund Act provides for amounts to be debited from the Future Fund to meet costs and expenses not exclusively related to that Fund, including those costs and expenses that presently should be shared with the HEEF (such as bank account fees and insurance premiums). Items 41 to 43 will make a number of amendments by omitting references to the HEEF Act and substituting appropriate references to the Nation-building Funds Act 2008 .

Income Tax Assessment Act 1997

Items 45 to 47 repeal provisions in the ITAA that provide tax deductions for gifts to the HEEF, consistent with the HEEF being closed and repeal of the HEEF Act.

Telecommunications (Consumer Protection and Service Standards) Act 1999

Items 48 to 50 repeal provisions in the Consumer Protection Act that establish the Communications Fund, consistent with the closure of the Communications Fund and the transfer of its balance to the BAF.

Telstra Corporation Act 1991

Items 51 to 56 remove references to the Communications Fund in the Telstra Corporation Act 1991 , consistent with the Communications Fund being closed and repeal of the provisions in the Consumer Protection Act that establish the Communications Fund.