House of Representatives

Explanatory Memorandum

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

Schedule 3 -Transitional and application provisions etc.

Certain transitional arrangements are required to be put in place as a result of the closure of the HEEF and the transfer of the balance of the HEEF and related activities to the EIF. The following transitional arrangements are to apply:

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the annual report of the Future Fund Board for the financial year beginning on 1 July 2008 must include a report in relation to the HEEF ( Item 2 );

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any outstanding borrowing or securities lending arrangements entered into by the Future Fund Board in relation to the HEEF will be taken to be continuing arrangements in relation to the EIF ( Items 3 and 4 );

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the engagement of an investment manager in relation to the HEEF will be taken to be a continuing engagement of that investment manager in relation to the EIF ( Item 5 ); and

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any refund of franking credits attributable to the HEEF will be credited to the EIF ( Item 6 ).

(references to the 'Future Fund Board' mean the Future Fund Board of Guardians - Item 1 )

The amendment made by Item 2 of Schedule 2 to the definition of 'acquire' in the Future Fund Act, brings it into line with the definition to be used in the Nation-building Funds Act 2008 . The purpose of the amendment is to make it clear that an acquisition includes an acquisition by way of an issue (say of a share, debenture or trust unit). Item 7 of this Schedule states that the amendment to the definition of 'acquire' does not imply that acquisitions could not previously occur by way of an issue.

Item 8 makes it clear that the amendment that remove from the ITAA the status of gifts to the HEEF apply only to gifts made after the commencement of this Act.

Items 9 to 16 relate to the Government's announcement to fast track its nation-building agenda, in response to the global financial crisis. As a result, certain arrangements have been adopted on an interim basis, in anticipation of the passage of the Nation-building Funds Bill 2008. These arrangements include:

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requesting Infrastructure Australia to bring forward advice on proposals that might be funded from the BAF;

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establishing an Interim EIF Advisory Board to examine and advise on proposals that might be funded from the EIF; and

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establishing an Interim HHF Advisory Board to examine and advise on proposals that might be funded from the HHF.

Infrastructure Australia and the interim advisory boards will be able to apply interim evaluation criteria in assessing these proposals, in the same way that is proposed under the Nation-building Funds Bill 2008.

Transitional provisions are required so that the work undertaken as part of these interim arrangements is properly recognised once the legislation has been enacted and the advising arrangements are placed on a statutory basis. A transitional provision is also required in relation to advice that may be provided by the Higher Education Endowment Fund Advisory Board in relation to 'transitional HEEF payments' that are to be provided for by the Nation-building Funds Bill 2008.

Items 9 to 12 apply where Infrastructure Australia has provided either the Infrastructure Minister, the Communications Minister, Energy Minister or Water Minister (as the case requires) with advice that a proposed payment satisfies the relevant interim BAF evaluation criteria. On commencement of the Nation-building Funds Act 2008 , such advice is to be taken as having satisfied the requirements of the new Act with the result that it may support a decision to make a payment out of the BAF (without the need to repeat the process).

Items 13 and 14 apply where the Interim EIF Advisory Board has provided either the Education Minister or the Research Minister (as the case requires) with advice that a proposed payment satisfies the relevant interim EIF evaluation criteria. On commencement of the Nation-building Funds Act 2008 , such advice is to be taken as having satisfied the requirements of the new Act with the result that it may support a decision to make a payment out of the EIF (without the need to repeat the process).

Item 15 applies where the Higher Education Endowment Fund Advisory Board, established under the HEEF Act, has given advice about a grant of financial assistance under that Act, and where such a payment may be made as a 'transitional HEEF payment' under the arrangements proposed by the Nation-building Funds Bill 2008. On commencement of the Nation-building Funds Act 2008 , such advice is to be taken as having satisfied the requirements of the new Act with the result that it may support a decision to make a payment out of the EIF (without the need to repeat the process).

Item 16 applies where the Interim HHF Advisory Board has provided the Health Minister with advice that a proposed payment satisfies the relevant interim HHF evaluation criteria. On commencement of the Nation-building Funds Act 2008 , such advice is to be taken as having satisfied the requirements of the new Act with the result that it may support a decision to make a payment out of the HHF (without the need to repeat the process).