Future Fund: Chairman Greg Combet strongly defends major overhaul as criticism mounts on Jim Chalmers

The treasury overhaul of the $230 billion Future Fund will not compromise the board’s investment decisions or obligations to maximise returns, chairman Greg Combet stressed on Friday.

Former Labor climate minister Mr Combet is the latest voice to weigh into a growing political row over a major decision by Treasurer Jim Chalmers to change the sovereign wealth fund’s role to prioritise housing, renewable energy projects and security infrastructure.

On Thursday, fund founder Peter Costello rounded on the plan as a “very bad” idea that risked creating a “political slush fund” that would hurt the nation’s taxpayers, while former Prime Minister John Howard called it “fiscal vandalism with a great dollop of hypocrisy”.

The two former political heavyweights backed Opposition outrage in what has become an increasingly partisan debate over accusations that Dr Chalmers is raiding the nation’s nest egg.

Mr Combet, who was attending an investor roundtable in Canberra, came out swinging in the treasurer’s defence on Friday, strongly refuting suggestions that the government proposal would undermine the mandate of the 18-year-old sovereign wealth fund.

The treasury had closely consulted with the fund’s board of guardians, who would not deviate from independent decision-making or their goal to make the wisest investment choices, he said.

“That is absolutely primary, it’s paramount - maximising returns as it has always been the case. Considering individual investment decisions on the basis of an appropriate risk adjusted return remains the case. We plan on making money for Australian taxpayers,” he told reporters.

“We are very mindful of the provisions of the future fund act, the legislation under which we operate,” he said, stressing that legal advice had been taken into account.

The “most significant element” of the new mandate was the “confirmation by the government that withdrawals from the Future Fund would be deferred to 2032/2033,” Mr Combet added.

“That gives the fund a lot of confidence we can manage our liquidity, we can return earnings to the budget, and we can look for investments across our portfolio, globally and domestically..in the knowledge that we’ve got until 2032, 2033 before withdrawals come from the fund,” he said.

It would also help the fund “to play an ongoing economic role as an investor and as a very important asset on the Commonwealth balance sheet.”

Mr Combet said the government’s priority areas were already aligned with the board’s thinking, with a strong focus on renewables.

Asked whether the fund would consider investments in nuclear energy, he said that “we don’t have exclusions in relation to the energy transition,” but did not see it as “especially likely at this stage.”

The Future Fund oversees six other wealth funds, including a $22.3 billion medical research fund, a $4.4 billion disaster ready fund and a $16.9 billion disability care fund.

It also oversees the $10 billion Housing Australia Future Fund, which was set up by the Labor government in 2023 to deal with housing supply.

The independent sovereign wealth fund was created in 2006 by then-treasurer Peter Costello using budget surpluses to pay for public servants’ pensions, but to more broadly benefit future taxpayers.

It has an existing benchmark return rate of the consumer price index plus four to five per cent per annum over the long term, which Mr Combet said would not change under the government plan.