Bills Digest no. 38 2007–08
Higher Education Endowment Fund Bill 2007
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Key issues
Main provisions
Conclusion
Endnotes
Contact officer & copyright details
Passage history
Higher Education
Endowment Fund Bill 2007
Date introduced:
16 August 2007
House: House of Representatives
Portfolio: Education, Science and
Training
Commencement:
The Act commences on the
day after it receives Royal Assent.
Links: The
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
at http://www.comlaw.gov.au/.
The Bill proposes to establish the Higher Education
Endowment Fund (HEEF), from which earnings from investments will be
used to make grants of financial assistance to eligible higher
education institutions in relation to capital expenditure and/or
research facilities.
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. [1]
The Government announced that the HEEF may
also receive additional capital from future budget surpluses, from
philanthropic investment which will be tax deductible and, if
asked, manage individual institutions endowments. [2] Budget estimates of the annual
earnings of the HEEF were $304 million. [3] The earnings would be distributed to
eligible higher education providers in a competitive tender process
by the Minister for Education, Science and Training after advice
from the HEEF Advisory Board.
At present, capital works and research
facilities are funded under the Higher Education Support Act
2003 (the HESA) from the Capital Development Pool (CDP), the
Research Infrastructure Block Grants (RIBG) programme, the
Institutional Grants Scheme (ISG), the National Collaborative
Research Infrastructure Scheme (NCRIS), and discretionary funding.
Capital works may also be funded under the annual Appropriations
Act $186 million has been approved for special infrastructure
projects between 2005 and 2008 from the appropriations. [4]
Although the Treasurer in a post budget
interview guaranteed that the fund would not take over existing
education funding [5]
and the HEEF measure media release described it as additional and
ongoing funding , post budget discussion speculated that dividends
from the HEEF might replace existing sources of capital works
funding. [6] Such
speculation was reinforced when the Minister for Education, Science
and Training was reported as stating that HEEF funds would
eventually supersede other capital funding sources such as the
Capital Development Pool . [7] However such fears might be allayed by the Minister s
second reading speech which states that the Endowment Fund
investment is in addition to existing programmes and serves a very
different purpose It will not be a source of recurrent funding as
some have suggested . [8]
Details of how disbursements from the fund
will be assessed will be provided in the administrative guidelines
still to be designed. The Minister s budget media release stated
the best proposals will support Australian Government policy with
respect to diversity, specialisation and responsiveness to labour
market needs and that the [HEEF] Board would take into
consideration whether universities had been able to raise matching
funds, for example from state or territory governments, industry,
alumni or members of the public. [9] This had been interpreted as a mandatory
requirement, but the President of the Australian Vice Chancellors
Committee (now Universities Australia), Professor Sutton, is
reported as having been assured by Department of Education, Science
and Training officials that it was not a requirement that
universities must raise matching funds to get earnings from the
endowment . [10]
Although the administrative guidelines may not make matching funds
a mandatory requirement, it seems likely that matching funds will
be considered in the assessment process and could benefit those
universities, such as the Group of Eight, that already win 70 per
cent of national competitive research grants and in 2004 received
$98 million in donations and bequests. [11]
An objective of the HEEF is to encourage
greater philanthropic support to universities. Although
philanthropic donations to the HEEF from business and individuals
will be tax deductible they cannot be directed to nominated
universities and will only be accepted on an unconditional basis.
[12] This provision
differs from the budget announcement which envisaged that
particular universities could be nominated as recipients by
philanthropic donors and that universities could request that the
HEEF manage their endowment funds. The Minister s second reading
speech has foreshadowed possible future amendments to allow
donations to universities. Without such amendments it may be
difficult to persuade donors to move from donating to their
nominated university with existing tax deductibility to instead
donating to the HEEF. [13] The objective of encouraging philanthropic support
might instead be achieved through the Government looking favourably
at university grant applications that can show matching funds. Such
a requirement would encourage universities to seek greater support
from state governments, commercial bodies and philanthropic
donors.
Unlike the United States and to a lesser
extent the United Kingdom, Australia does not have a strong
tradition of philanthropic support of universities. In 2005 only
1.1 per cent of Australian university revenue came from donations
and bequests. [14]
Private funding for higher education in the USA
is substantially higher than it is anywhere else in the world, with
many American universities having established considerable
endowment funds over the last twenty years. Harvard University, for
example, has developed an endowment fund that was valued at $US
25.9 billion in 2005. [15] Yale University, its closest competitor, has an
endowment fund that was valued at $US 15.2 billion whilst Stanford,
Texas and Princeton Universities each have endowment funds that
were valued at more than $US 10 billion in 2005. [16] The USA does not have a
centralised, Federal-Government-run higher education endowment
fund. However twenty-four US states have created government
matching fund programmes. [17] Although there is a great deal of variability in
American matching fund programmes, due to their being designed,
implemented and overseen at a state level, these programmes purpose
is typically to leverage private funds, enhance the quality of
teaching and learning and increase access to higher education.
[18]
The average American university in 2003 had an
endowment fourteen times that of a comparable British university.
The only British universities that compare with the best endowed
American universities are Oxford and Cambridge. These universities
would rank around 15th in the US list, with no other UK
university figuring in the top 150. [19]
The UK Government is implementing policy to
increase philanthropic support to English universities. In 2007 the
UK Prime Minister and the UK Minister for Higher Education
announced funding of 200 million over three years for a
matched-funding scheme to support universities in their fundraising
efforts. The scheme, to start in 2008, is based on recommendations
in the Increasing voluntary giving to higher education
report. [20] The
scheme will contribute matching public funds to private donations
on a 2:1 private to public basis up to a maximum of 2m. (The cap of
2m is to ensure that the funding will not be concentrated in just a
few institutions.) Under the scheme institutions will be generally
free to decide how to spend the funding but will be expected to
strike a reasonable balance between infrastructure development and
bursaries and scholarships. [21]
The UK Government s matched-funding scheme
differs from the HEEF in that its primary objective is to promote
increased private funding through endowments for higher education,
and thereby increase the funding independence of universities.
Although the HEEF does seek to encourage increased philanthropic
support for Australian universities, the main aim of the HEEF is to
provide support for necessary capital works and research facilities
in Australian universities.
Stakeholders have welcomed the HEEF measure
provided it is not established at the expense of existing funding
schemes, including those related to capital expenditure and
research facilities of higher education institutions. [22] Some reservation has
been expressed on the ability of the HEEF earnings to meet the
existing shortfall in infrastructure funding, such as the estimated
deferred maintenance of $1.5 billion in 2005. [23]
Since the Bill was introduced stakeholders
have expressed concerns on a number of issues discussed in the
following key issues section.
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The Minister claimed the HEEF as an
unprecedented investment for the future of universities. [24] The measure has been
interpreted as doubling the existing annual $5.8 billion funding to
higher education. However it should be recognised that it is the
$304 million annual dividend from HEEF, not the $6 billion capital
investment, which provides the additional higher education funding
in the 2007-2008 budget.
Provisions in clause 40 of
the Bill give the Minister control of the Advisory Board including
selecting members (40(2)), terminating members of
the Board (40(3)) and giving directions in
relation to the way they carry out their function
(40(4)). Proposed clause 45
allows the Minister to authorise grants to eligible higher
education institutions.
Unlike section 238-10 of the Higher
Education Support Act 2003 (the HESA), which allows the
Minister to make guidelines and for the guidelines to be
disallowable legislative instruments, parliamentary scrutiny of the
disbursements from the HEEF is minimal. The Minister s decisions
are to be tabled but are non-disallowable legislative instruments.
In making such decisions there is no requirement that the Minister
follows the Advisory Board s recommendations or makes public any
changes from the recommendations. Although stakeholders have
expressed concern at these powers and the lack of transparency,
they are not asking that the minister s decisions should be
disallowable but rather that the program guidelines set out clear
criteria and processes and that the guidelines, like those under
the HESA, should be disallowable. [25] Professor Larkins, representing
Universities Australia and the Group of Eight told the Senate
Committee inquiring into the Bill that
Where final decisions by the minister differ
from those of the advisory board, the reasons for that difference
should be absolutely explicit. We have had recent experience of
advice from the peer review system and the Australian Research
Council being overturned by the minister not the current minister.
That creates a lot of mistrust in the system. For the confidence of
the sector it is important that we have open and transparent
mechanisms.
[26]
Similarly Mr Bradley Smith, representing the
Federation of Australian Scientific and Technological Societies
(FASTS) stated we have no problem with the minister having the
final decision, as is the case with the ARC, but we want very clear
criteria under which those decisions are made and then it is known
when those variances occur and why . [27] Without such criteria stakeholders
fear that the grants process is open to political influence. FASTS
submitted that in its current form, the Fund runs a risk of lacking
credibility and accountability in the sector and wider community by
becoming, in effect, a significant slush fund for Ministerial
pork-barrelling . [28]
There is lack of clarity as to the
relationship between grants from HEEF and existing capital and
research infrastructure programmes, including other periodic
submission-based programmes and those programmes that provide
ongoing block funding. FASTS submits that there is a risk that a
series of annual, competitive project grants will lead to
opportunistic planning and short horizons in universities rather
than strategic investments . [29] Stakeholders have suggested overcoming
uncertainty by the allocation of two streams of grants from the
HEEF: an annual block grant determined by an agreed formula (such
as the existing Research Infrastructure Block Grants) and a
submission based competitive application and allocation with
priority given to projects of national significance.
Grant details such as matching fund
requirements, priorities, types of projects, maximum limits and
compliance requirements are unknown.
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The Bill provides for:
-
the establishment of the Higher Education
Endowment Fund (Part 2)
-
how the Fund is to be invested (Part
3)
-
how grants from the Fund are to be allocated to
higher education institutions (Part 4)
-
reporting obligations (Part
5), and
-
other implementation issues (Part
6).
Part 1 of the Bill provides a simplified
outline and definitions for key terms.
Part 2, Division 2 (proposed clauses
11 and 12) establishes the Higher Education Endowment Fund
(HEEF). The Fund consists of the Higher Education Endowment Fund
Special Account and the investments of the Fund
(11(2)).
A Special Account is a ledger account
recording a right to draw money from the Consolidated Revenue Fund
(CRF). The HEEF Special Account is established for the purposes of
section 21 of the Financial Management and
Accountability Act 1997 (FMA Act 1997). Special Accounts may
record amounts credited to them by the Commonwealth, and also other
sources as allowed by their establishing legislation, such as State
and Territory governments or community members. [30]
Part 2, Division 3 sets out
how money can be credited to the HEEF.
Proposed clause 13 states
that as soon as practicable after the commencement of the Act, the
Treasurer and the Finance Minister (referred to as the relevant
Ministers) must make a written determination to credit $5 billion
to the HEEF, either as a lump sum or in instalments. The written
determination will be a legislative instrument but not disallowable
by Parliament under section 42 of the Legislative Instruments
Act 2003. (13(3)).
The relevant Ministers may then make
subsequent credits to the HEEF Special Account via written
determination (clause 14).
On 21 August 2007 the Treasurer announced that
an extra $1 billion budget surplus would be deposited to the HEEF.
The Treasurer s press statement said that for cash management
reasons, HEEF will be established with $3 billion at the end of
October 2007 and a further $3 billion will be added to the Fund at
the end of January 2008. [31]
Proposed clause 15 allows for
gifts to the HEEF. The Education Minister must authorise the
acceptance of a specified gift, or a specified class of gifts, to
the HEEF. The Minister s authorisation is a legislative instrument
but not disallowable by Parliament under section 42 under the
Legislative Instruments Act 2003 (15(4)).
The Minister may delegate this power to the Secretary or an SES
Officer of the Education Department (clause
55).
Part 2, Division 4 sets out
how money will be debited from the HEEF.
Proposed clause 16 sets out
the purposes of the Fund Account. Debits to the Fund Account are
allowed if they meet the criteria for either:
-
a grant purpose related exclusively to the
Fund, for example the payment of a grant to a higher education
institution for capital expenditure or research facilities, or
payment of costs related to investments of the Fund, or
-
a grant purpose not related exclusively to the
Fund, for example, costs associated with establishing a bank
account for the Future Fund Board, or costs and expenses of the
Future Fund Board including remuneration and allowances.
Under proposed clause 17, the
Future Fund Board must ensure that there is sufficient money in the
Fund Account to cover authorised grants.
Part 2, Division 5
facilitates transfers between the HEEF and the Future Fund to
ensure equal apportionment of management expenses, such as
remuneration and allowances as mentioned above.
This Part of the Bill grants to the Future Fund Board of Guardians
the responsibility for managing the investments of the HEEF. The
Future Fund Board currently consists of Chair Mr David Murray and
six members: Mr Jeffrey Browne, Ms Susan Doyle, Dr John
Mulcahy, Mr Trevor Rowe AM, Mr Brian Watson and Mr John Paterson.
The powers provided in this Bill to the Future Fund Board of
Guardians mirror those provided for in the
Future Fund Act 2006. For comment on the investment powers
of the Future Fund Board readers are referred to the Parliamentary
Library s Bills
Digest for the Future Fund Bill 2006. [32]
Proposed clause 22 states
that the Future Fund Board may invest in any financial assets,
except for derivatives, which are covered separately in proposed
clause 31. Proposed clause 23 sets out the general
rules for management of Fund investments:
-
income derived from Fund investments is to be
credited to the HEEF Special Account (referred to as the Fund
account), rather than the CRF
-
a return of capital, or any other financial
distribution, relating to Fund investments is to be credited to the
Fund account
-
the Future Fund Board may realise an investment
of the Fund (ie sell its investments), with proceeds to be credited
to the Fund account
-
investments nearing maturity may be
re-invested, and
-
Section 39 of the FMA does not apply to Fund
investments.
[33]
Proposed clause 24 requires
the Treasurer and Finance Minister to give the Future Fund Board at
least one written direction about the performance of the HEEF
investment functions, to be known as the Higher Education
Endowment Fund Investment Mandate.
In giving the Mandate, the Ministers must have
regard to:
-
maximising the return earned on the Fund over
the long term
-
enhancing the Commonwealth s ability to make
grants to higher education institutions for capital expenditure and
research facilities,
- any Maximum Grants Rules in force see proposed clause
47, and
-
any other matters that the Ministers consider
relevant .
The Investment Mandate may include policies on
risk and return and the allocation of financial assets. However,
the Ministers must not give a direction to invest in a particular
asset, to acquire a particular financial derivative, or allocate
financial assets to any particular business entity, activity or
business (proposed clause 25).
Investment Mandate directions will be
legislative instruments, however will not be disallowable under
section 42 of the Legislative Instruments Act because of the
exclusion provisions of section 44 of that Act. Mandate directions
must not take effect until 15 days after they are given
(proposed 24(10)).
Under proposed clause 26, the
Ministers must consult with the Future Fund Board before giving
them an Investment Mandate direction. This must include sending the
Board a draft direction, inviting the Board to make a submission
(within a set time period not specified in the legislation however
it must be reasonable ), and considering any submission from the
Board. Any submissions from the Board regarding proposed directions
must be tabled in each House of Parliament at the same time as the
clause 24 directions.
For its part, the Future Fund Board must take
all reasonable steps to comply with the HEEF Investment Mandate
(proposed clause 27). If the
Board becomes aware that it has failed to comply with the
Investment Mandate, it must write to the Ministers and set out any
proposed action (proposed 27(2)).
If the Ministers are satisfied that the Board has failed to follow
the Mandate, they may require a written explanation for the
failure, and direct the Board to take action in order to comply
with the Mandate (proposed
27(3)). These directions are not legislative
instruments. The Future Fund Board must then comply with the
Ministers direction (proposed
27(4)).
Proposed clause 28 states
that the Future Fund Board must not trigger the takeover provisions
of the Corporations Act 2001. These provisions are
detailed in the Bills
Digest for the Future Fund Bill 2006. In short, the Future Fund
Board is prevented from acquiring an interest in the voting capital
of either a listed or unlisted company with more than 50 members,
where such an acquisition would result in the Board:
-
increasing their share of the voting capital to
more than 20 per cent of the total issued voting capital, or
-
increasing their share of the voting capital if
they already have between 20 and 90 per cent of the total voting
capital on issue.
The Explanatory Memorandum states that this
provision is included to minimise market distortion and eliminate
the potential for conflicts of interest for the Government as a
market regulator, and that the restrictions are not expected to
have a material impact on the investment efficiency of the HEEF as
they are similar to the limits that other fund managers often use.
[34]
If, for some reason, the Board has not
complied with section 606 of the Corporations Act 2001,
the validity of the transaction is not affected
(proposed subclause 28(2)).
The HEEF (Consequential Amendments) Bill 2007
contains a provision which would also limit the Future Fund Board
from acquiring more than a 20 per cent stake in a foreign publicly
listed company.
Proposed clause 29 prohibits
the Future Fund Board from borrowing for the Fund, except in
limited circumstances set out in sub-clause 2,
regarding the need for short-term (7 day) borrowing for transaction
settlement. However, proposed subclause
29(3) does allow for borrowing to be authorised for a
purpose as specified in the regulations. The Explanatory Memorandum
states that this is to provide flexibility for unforseen events or
changes in the investment environment , to be met without the need
for amending legislation. These Regulations would be disallowable
by Parliament (unlike many other instruments as provided for in
this Bill).
The Future Fund Board is required to formulate
policies with regard to the investment strategy of the Fund,
benchmarks for assessing the Fund s performance, risk management,
meeting international best practice for institutional investment,
and any other matter specified in the regulations. These policies
must be consistent with the HEEF Investment Mandate. The Board s
policies must be published on the internet and regularly reviewed
(proposed clause 30).
Proposed clause 31 sets out
the circumstances in which the Future Fund Board may acquire
derivatives. The Explanatory Memorandum outlines the use of
derivatives:
Derivatives are widely used by financial market
participants as a tool for risk management. As the sophistication,
size and mobility of capital markets around the world increases,
investment managers are looking for more ways to maximise the
returns on investments while minimising the volatility of results.
[35]
Under proposed clause 31, the Future Fund
Board may acquire derivatives for the purpose of:
-
protecting the value of an investment of the
Fund (other than a derivative)
-
protecting the return on an investment (other
than a derivative)
-
achieving indirect exposure to financial assets
for a purpose in connection with the Fund, or
-
achieving transactional efficiency for a
purpose in connection with the Fund.
However derivatives must not be acquired for
the purposes of speculation or leverage
(31(1)(e-f)). Any acquisition of a derivative must
be consistent with the Future Fund Board s investment policies
(31(2)).
Proposed clause 33 allows the
Future Fund Board to enter into securities lending
arrangements.
Proposed clause 34 allows the
Future Fund Board to engage investment managers. The clause also
states that the Board must use an investment manager to
make investments, acquire derivatives, enter a securities lending
arrangement or realise the Fund s financial assets, unless the
responsible Ministers approve another manner of investment
(34(2)(f)). The
Future Fund Management Agency [36] is specifically excluded from the
definition of an investment manager , because, as the Explanatory
Memorandum explains, it is intended that the investment activities
mentioned above will be outsourced. [37]
Investment managers are required to report to
the Future Fund Board and the Future Fund Management Agency on the
state of the Fund s investments, when and how the Future Fund Board
determines (proposed 34(4)).
Proposed Part 4 of the Bill
establishes the HEEF Advisory Board, sets out its functions, and
enables the Education Minister to authorise grants to eligible
higher education institutions in relation to capital expenditure
and research facilities. This part of the Bill has attracted
significant public comment regarding the Minister s role in
determining the make-up and actions of the Advisory Board, and the
fact that the role of the Board in helping to determine grant
guidelines, as set out in the Bill, is vague (see key issues).
Proposed clause 40
establishes the HEEF Advisory Board, to be appointed by the
Education Minister. The Education Minister may direct the Board as
to how it is to carry out its functions, and procedures for
meetings. These directions are non-disallowable legislative
instruments.
Proposed clause 41 states
that the function of the Advisory Board is to advise the Education
Minister about matters referred to it by the Education Minister.
The matters must relate to the making of grants of financial
assistances to eligible higher education institutions in relation
to capital expenditure or research facilities. Proposed
clauses 42 to 44 outline remuneration, disclosure and
resignation arrangements.
Proposed clause 45 gives the
Education Minister the power to authorise grants to eligible higher
education institutions in relation to capital expenditure and
research facilities. The Minister may delegate this power to the
Secretary or an SES Officer of the Education Department
(proposed clause 55). Grants may
not be authorised until 1 July 2008 (proposed
clause 46(3)).
The Education Minister must not make a grant
under section 45 unless they have received a statement from the
Future Fund Board regarding the Maximum Grant Amount for that
financial year (proposed clause
46).
If a grant of financial assistance is to be
made to an eligible higher education institution, the terms and
conditions of the grant are to be set out in a written agreement
between the Education Minister (on behalf of the Commonwealth) and
the institution (proposed clause 50). The
Education Minister may delegate this agreement-making function to
the Secretary or an SES Officer of the Education Department
(proposed clause 55).
Proposed clause 47 requires
the Treasurer and Finance Minister to make rules for ascertaining
the maximum amount that can be debited from the HEEF Account during
a financial year for grants for capital expenditure and research
facilities. These rules are to be referred to as the
Maximum Grants Rules. In making the rules, the
Ministers must only have regard to
(proposed 47(3)):
-
the objective that over the medium to long term
(defined as five years or longer), the HEEF s balance not fall
below the real value of the Government contributions to the HEEF
Account (to be initially $6 billion), and
-
the objective of moderating volatility in
maximum grants amounts from financial year to financial year (ie
avoiding large swings in the grant amounts).
The Ministers must consult with the Education
Minister and the Future Fund Board prior to making the Maximum
Grants Rules. The Rules are to be non-disallowable legislative
instruments (proposed 47(6)).
The maximum amount that can be debited from
the HEEF Account in each financial year for grants in relation to
capital expenditure or research facilities must not exceed the
accumulated nominal earnings of the Fund as at the start of the
financial year (defined as the difference between the balance of
the Fund at 1 July and the total of Government contributions to the
Fund at 30 June). If the balance of the Fund does not exceed the
total Government contributions, the nominal earnings are taken to
be nil (proposed clause 49).
Part 5 details reporting obligations for the
Future Fund Board regarding the HEEF. Firstly, the Treasurer and
Finance Minister are required to agree on which of them is to be
the nominated Minister for the purposes of the Act
(proposed clause 54).
The nominated Minister may then give the
Future Fund Board a written notice requiring a report or
information on one or more specified matters relating to the
performance of the Board s functions under the Act, within a
specified period (proposed clauses 51(1) and (2)).
The Future Fund Board must comply with such a request, and the
Minister may decide to publish the Boards report
or information provided. These documents will not be legislative
instruments. The nominated Minister may provide
these documents to their counterpart responsible Minister, and
must provide such documents to the Education
Minister (clause 54 (4) and (5)). There is no
requirement for the Minister to publish an annual report or similar
document on the performance of the HEEF.
In addition, proposed clause
52 requires the Future Fund Board to keep the Treasurer
and the Finance Minister informed of its operations under the Act,
in the form of reports, documents and information as
appropriate.
Conclusion
The Bill deals broadly with the investment and
disbursement aspects of the HEEF, and these largely mirror the
provisions set out in the Future Fund Bill of 2006. However, much
of the detail of the disbursement to universities will be in the
administrative guidelines yet to be released. There is a degree of
uncertainty caused by the lack of clarity in how funding
applications will be assessed, and the paucity of transparency
created by the Minister s powers in relation to the establishment
of the Advisory Board and the granting of funds to
universities.
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Endnotes
[2]. The Hon Julie
Bishop, Higher
Education Endowment Fund, Media Release BUDB
03/07, 8 May 2007. Although the Minister s second reading speech
has foreshadowed possible future amendments that would allow
universities to ask the HEEF to manage their endowment funds, there
are no such provisions in the Bill.
[8]. The Hon. Julie
Bishop, Higher Education Endowment Fund Bill 2007, Second Reading
Speech , House of Representatives Debates,
16 August 2007, p. 3.
[11]. In 2004 a
total of $171 million in donations and bequests was received by all
universities, of which the Group of Eight raised $98 million.
Department of Education, Science and Training,
Finance 2004, (published December 2005)
http://www.dest.gov.au/NR/rdonlyres/FC5576B6-C249-4C16-BE17-91199CF47845/9697/finance_2004.pdf.
The Group of Eight consists of: The Australian National University,
Monash University, The University of Adelaide, The University of
Melbourne, The University of New South Wales, The University of
Queensland, The University of Sydney and The University of Western
Australia. See: The Group of Eight website http://www.go8.edu.au/.
[13]. See: J.
Mather, Unis vie for slice of $5 billion endowment fund ,
Campus Review, 15 May 2007.
[15]. Harvard
endowment posts solid positive return , Harvard University
Gazette, 19 September 2006. http://www.news.harvard.edu/gazette/2006/09.21/99-endowment.html.
In 2006, the overall value of Harvard s endowment increased to
$29.2 billion US. This amounted to almost a third of Harvard s
operating budget (or, $930 million US); see also S. Schwartz, HEEF
must heed lesson of Harvard , Australian Financial Review,
2 July 2007.
[17]. Council for
Advancement and Support of Education, Select Government
Matching Fund Programmes: an Examination of Characteristics and
Effectiveness, December 2004, p.1. http://192.203.212.22/files/Europe/pdfs/Sutton2.pdf
Similar government matching fund programmes have been implemented
in provinces in Canada, other countries and Hong Kong and
Singapore.
[25]. See Mr Bradley Smith, Evidence to Senate Standing
Committee on Employment, Workplace Relations and Education, Inquiry
into the Higher Education Endowment Fund Bill 2007, August 31
2007.
[26]. Professor Larkins, Evidence to Senate Standing
Committee on Employment, Workplace Relations and Education, Inquiry
into the Higher Education Endowment Fund Bill 2007, August 31 2007.
see also
Group of Eight submission to the Senate Standing Committee on
Employment, Workplace Relations and Education, Inquiry into the
Higher Education Endowment Fund Bill 2007, p. 3
[27]. Mr Bradley Smith, Evidence to Senate Standing
Committee on Employment, Workplace Relations and Education, Inquiry
into the Higher Education Endowment Fund Bill 2007, August 31
2007.
[32]. Leslie
Nielsen and Jonathan Chowns, Future Fund Bill 2005 , Bills
Digest no. 93, 2005-06, Parliamentary Library, Canberra, 7
February 2006.
[33]. Section 39 of the FMA deals with the
investment of 'public money'. All public money must be credited to
the CRF. By providing that section 39 FMA does not apply the Fund s
investments, they are removed from the definition of 'public
money'. This allows the investments of the Fund to be reinvested
and the income of these investments received into the Fund Account
without having to first be re-credited to, and then paid out from,
the CRF. Further, if section 39 of the FMA did apply, the
investments would have to be made in the name of either of the
responsible Ministers. However, removal of the Fund s assets from
the definition of public monies allows these investments to be made
in the name of the Board. This is an additional device to ensure
that investments are made at arms-length from the responsible
ministers in particular and the Government in general (reproduced
from Bills Digest no. 93, 2005-06, op. cit).
[34]. Explanatory Memorandum, p. 19.
[35]. Explanatory Memorandum, p. 20.
[36]. The Future Fund Management Agency was established in
the Future Fund Act 2006 to give effect to the investment
strategies and decisions of the Future Fund Board of Guardians. The
Agency engages the service providers who implement the Board s
investment decisions, and provides secretariat support to the
Board.
[37]. Explanatory Memorandum, p. 21.
Coral Dow
Social Policy Section
Bronwen Jaggers
Law and Bills Digest Section
6 September 2007
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