Bills Digest no. 39 2007–08
Higher Education Endowment Fund (Consequential
Amendments) Bill 2007
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
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Endowment Fund (Consequential Amendments) Bill
16 August 2007
House: House of Representatives
Portfolio: Education, Science and
Sections 1-3 commence upon
Royal Assent, Schedule 1 commences as the same time as the
Higher Education Endowment Fund Act 2007.
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
The Bill seeks
to amend the
Future Fund Act 2006 (the Future Fund Act) and the
Income Tax Assessment Act 1997 (the ITAA) to support
implementation of the Higher Education Endowment Fund (HEEF). The
Bill also seeks to amend the Future Fund Act to limit Ministerial
directions on investments.
The Treasurer opened his 2007-2008 Budget
speech with the announcement that $5 billion of the budget surplus
would be invested in an endowment fund, the Higher Education
Endowment Fund (HEEF), the earnings of which will fund university
capital works and research facilities.  The Treasurer has subsequently
announced an extra $1 billion of budget surplus will be added to
the HEEF by January 2008.
The HEEF will be managed by the Future Fund
Board of Guardians. The HEEF and its investment and disbursement
parameters will be established through the Higher Education
Endowment Fund Bill 2007, currently before Parliament. Readers are
referred to the Bills
Digest for that Bill for a detailed background on the HEEF,
public comment on the proposed scheme, and key issues arising out
of that Bill. 
This Bill seeks to make consequential
amendments to the Future Fund Act and the ITAA to support the
establishment and operation of the HEEF.
Schedule 1, Part 1 contains amendments to the
Future Fund Act to expand the legislative mandate of the Future
Fund Board of Guardians to include management of the HEEF. The main
changes insert new definitions and clarify that the Future Fund
Board of Guardians will now have a dual role to manage the Future
Fund and the Higher Education Endowment Fund. As far as possible,
the role of the Board in relation to the HEEF has been detailed in
the HEEF Bill currently before Parliament. The amendments contained
in this Bill mostly relate to clarifying the role of the Future
Fund Board with regard to management of the Future Fund
investments. Some of the main amendments are outlined below.
Under the existing Future Fund Act, the Board
is bound by an Investment Mandate given to it by the responsible
Ministers (the Treasurer and Minister for Finance), in relation to
investments for the Future Fund.
References to investment mandate will be
amended to make it clear that the Future Fund Board will now be
bound by a Future Fund Investment Mandate and a
Higher Education Fund Investment Mandate (which is
detailed in the HEEF Act currently before Parliament). 
proposes to insert new section 18A into the Future
Fund Act, placing limitations on the Future Fund Investment
Mandate. Under proposed 18A, the responsible Ministers must not
give a direction within the Future Fund Investment Mandate which
would, directly or indirectly, require the Board to invest in a
particular financial asset, acquire a particular derivative, or
allocate finances to a particular business entity or activity or
business. These provisions have also been included in the HEEF
Investment Mandate in the HEEF Bill. In her Second Reading speech
for this Bill the Minister cited responsible governance as the
reason for this update to the Future Fund Act. 
References in the existing Future Fund Act
regarding the Board s investment function are
amended to make it clear that the Board will now have two
investment functions for the Future Fund and the HEEF.
Items 75 77 amend the ITAA to
allow monetary gifts to the HEEF to be considered tax
. See: the
Explanatory Memorandum at p. 7 for details on which items
relate to the Investment Mandate provisions in the Act.
. The Hon. Julie Bishop MP, Minister for Education,
Second Reading Speech: Higher Education Endowment Fund
(Consequential Amendments) Bill 2007 House of Representatives
16 August 2007, p. 5.
Law and Bills Digest Section
4 September 2007
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