{"id":"F2020L00119","name":"Disaster Ready Fund Investment Mandate Direction 2020","slug":"disaster-ready-fund-investment-mandate-direction-2020","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":100676,"registerId":"commonwealth-F2020L00119-current","compilationNumber":null,"startDate":"2026-04-02","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"Part 1","sectionType":"part","heading":"Preliminary","content":"## Part 1 Preliminary\n\n#### 1 Name\n\n  This Direction is the Disaster Ready Fund Investment Mandate Direction 2020.\n\n#### 2 Commencement\n\n  This Direction commences on the 15th day after it is given to the Board.\n\n> Note 1: Section 42 (disallowance) of the Legislation Act 2003 does not apply to the direction—see regulations made for the purposes of paragraph 44(2)(b) of that Act.\n\n> Note 2: Part 4 of Chapter 3 (sunsetting) of the Legislation Act 2003 does not apply to the direction—see regulations made for the purposes of paragraph 54(2)(b) of that Act.\n\n#### 3 Authority\n\n  This Direction is in force under the Disaster Ready Fund Act 2019.\n\n#### 4 Definitions\n\n  In this Direction:\n\n> Act means the Disaster Ready Fund Act 2019.\n\n> Board means the Future Fund Board of Guardians established by section 34 of the Future Fund Act 2006.\n\n> Consumer Price Index means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Bureau of Statistics.\n\n> Fund means the Disaster Ready Fund established by the Act.\n\n> Future Fund Act means the Future Fund Act 2006.\n\n> Responsible Ministers has the same meaning as in the Act.\n\n  \n\n## Part 2 Direction\n\n#### 5 Object\n\n  (1) The object of this Direction is to give guidance to the Board in relation to its investment strategy for the Fund.\n  (2) The Board must seek to maximise the return earned on the Fund over the long term, consistent with international best practice for institutional investment, pursuant to section 40 of the Act, and subject to its obligations under the Act and any directions given by the Responsible Ministers under subsection 39(1) of the Act.\n  (3) This Direction is given under subsection 39(1) of the Act to articulate the Government’s expectations for how the Fund will be invested and managed by the Board. This sets out matters of risk and return for the Fund.\n\n#### 6 Benchmark return and acceptable level of risk\n\n  (1) The Board is to adopt an average return over the long term of at least the Consumer Price Index + 2.0 per cent to + 3.0 per cent per annum, net of costs, as the benchmark return on the Fund.\n  (2) During the initial transition period, as the Board develops a long-term strategic asset allocation, the Government anticipates a return lower than the benchmark return.\n  Acceptable level of risk\n    (1) In constructing a portfolio, the Board:\n    (a) must determine an acceptable but not excessive level of risk for the Fund; and\n    (b) must have regard to its obligations under section 17 of the Act.\n    (2) The Government acknowledges that targeting the long-term benchmark return implies accepting the risk of capital losses, in adverse markets, that may be 15 per cent to 20 per cent of the portfolio over a three-year period.\n\n#### 7 Board must consider impacts from its investment strategy\n\n  (1) In undertaking its investment activities, the Board must act in a way that:\n    (a) minimises the potential to effect any abnormal change in the volatility or efficient operation of Australian financial markets; and\n    (b) is unlikely to cause any diminution of the Australian Government’s reputation in Australian and international financial markets.\n\n#### 8 Corporate governance\n\n  (1) The Board must have regard to international best practice for institutional investment in determining its approach to corporate governance principles, including in relation to its voting policy.\n\n#### 9 Reporting\n\n  The Board must publish quarterly portfolio updates on its website showing:\n  (a) actual returns against benchmark return; and\n  (b) asset allocations by category.","sortOrder":0},{"sectionNumber":"1","sectionType":"section","heading":"Name","content":"#### 1 Name\n\n  This Direction is the Disaster Ready Fund Investment Mandate Direction 2020.","sortOrder":1},{"sectionNumber":"2","sectionType":"section","heading":"Commencement","content":"#### 2 Commencement\n\n  This Direction commences on the 15th day after it is given to the Board.\n\n> Note 1: Section 42 (disallowance) of the Legislation Act 2003 does not apply to the direction—see regulations made for the purposes of paragraph 44(2)(b) of that Act.\n\n> Note 2: Part 4 of Chapter 3 (sunsetting) of the Legislation Act 2003 does not apply to the direction—see regulations made for the purposes of paragraph 54(2)(b) of that Act.","sortOrder":2},{"sectionNumber":"3","sectionType":"section","heading":"Authority","content":"#### 3 Authority\n\n  This Direction is in force under the Disaster Ready Fund Act 2019.","sortOrder":3},{"sectionNumber":"4","sectionType":"section","heading":"Definitions","content":"#### 4 Definitions\n\n  In this Direction:\n\n> Act means the Disaster Ready Fund Act 2019.\n\n> Board means the Future Fund Board of Guardians established by section 34 of the Future Fund Act 2006.\n\n> Consumer Price Index means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Bureau of Statistics.\n\n> Fund means the Disaster Ready Fund established by the Act.\n\n> Future Fund Act means the Future Fund Act 2006.\n\n> Responsible Ministers has the same meaning as in the Act.","sortOrder":4},{"sectionNumber":"Part 2","sectionType":"part","heading":"Direction","content":"## Part 1 Preliminary\n\n#### 1 Name\n\n  This Direction is the Disaster Ready Fund Investment Mandate Direction 2020.\n\n#### 2 Commencement\n\n  This Direction commences on the 15th day after it is given to the Board.\n\n> Note 1: Section 42 (disallowance) of the Legislation Act 2003 does not apply to the direction—see regulations made for the purposes of paragraph 44(2)(b) of that Act.\n\n> Note 2: Part 4 of Chapter 3 (sunsetting) of the Legislation Act 2003 does not apply to the direction—see regulations made for the purposes of paragraph 54(2)(b) of that Act.\n\n#### 3 Authority\n\n  This Direction is in force under the Disaster Ready Fund Act 2019.\n\n#### 4 Definitions\n\n  In this Direction:\n\n> Act means the Disaster Ready Fund Act 2019.\n\n> Board means the Future Fund Board of Guardians established by section 34 of the Future Fund Act 2006.\n\n> Consumer Price Index means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Bureau of Statistics.\n\n> Fund means the Disaster Ready Fund established by the Act.\n\n> Future Fund Act means the Future Fund Act 2006.\n\n> Responsible Ministers has the same meaning as in the Act.\n\n  \n\n## Part 2 Direction\n\n#### 5 Object\n\n  (1) The object of this Direction is to give guidance to the Board in relation to its investment strategy for the Fund.\n  (2) The Board must seek to maximise the return earned on the Fund over the long term, consistent with international best practice for institutional investment, pursuant to section 40 of the Act, and subject to its obligations under the Act and any directions given by the Responsible Ministers under subsection 39(1) of the Act.\n  (3) This Direction is given under subsection 39(1) of the Act to articulate the Government’s expectations for how the Fund will be invested and managed by the Board. This sets out matters of risk and return for the Fund.\n\n#### 6 Benchmark return and acceptable level of risk\n\n  (1) The Board is to adopt an average return over the long term of at least the Consumer Price Index + 2.0 per cent to + 3.0 per cent per annum, net of costs, as the benchmark return on the Fund.\n  (2) During the initial transition period, as the Board develops a long-term strategic asset allocation, the Government anticipates a return lower than the benchmark return.\n  Acceptable level of risk\n    (1) In constructing a portfolio, the Board:\n    (a) must determine an acceptable but not excessive level of risk for the Fund; and\n    (b) must have regard to its obligations under section 17 of the Act.\n    (2) The Government acknowledges that targeting the long-term benchmark return implies accepting the risk of capital losses, in adverse markets, that may be 15 per cent to 20 per cent of the portfolio over a three-year period.\n\n#### 7 Board must consider impacts from its investment strategy\n\n  (1) In undertaking its investment activities, the Board must act in a way that:\n    (a) minimises the potential to effect any abnormal change in the volatility or efficient operation of Australian financial markets; and\n    (b) is unlikely to cause any diminution of the Australian Government’s reputation in Australian and international financial markets.\n\n#### 8 Corporate governance\n\n  (1) The Board must have regard to international best practice for institutional investment in determining its approach to corporate governance principles, including in relation to its voting policy.\n\n#### 9 Reporting\n\n  The Board must publish quarterly portfolio updates on its website showing:\n  (a) actual returns against benchmark return; and\n  (b) asset allocations by category.","sortOrder":5},{"sectionNumber":"5","sectionType":"section","heading":"Object","content":"#### 5 Object\n\n  (1) The object of this Direction is to give guidance to the Board in relation to its investment strategy for the Fund.\n  (2) The Board must seek to maximise the return earned on the Fund over the long term, consistent with international best practice for institutional investment, pursuant to section 40 of the Act, and subject to its obligations under the Act and any directions given by the Responsible Ministers under subsection 39(1) of the Act.\n  (3) This Direction is given under subsection 39(1) of the Act to articulate the Government’s expectations for how the Fund will be invested and managed by the Board. This sets out matters of risk and return for the Fund.","sortOrder":6},{"sectionNumber":"6","sectionType":"section","heading":"Benchmark return and acceptable level of risk","content":"#### 6 Benchmark return and acceptable level of risk\n\n  (1) The Board is to adopt an average return over the long term of at least the Consumer Price Index + 2.0 per cent to + 3.0 per cent per annum, net of costs, as the benchmark return on the Fund.\n  (2) During the initial transition period, as the Board develops a long-term strategic asset allocation, the Government anticipates a return lower than the benchmark return.\n  Acceptable level of risk\n    (1) In constructing a portfolio, the Board:\n    (a) must determine an acceptable but not excessive level of risk for the Fund; and\n    (b) must have regard to its obligations under section 17 of the Act.\n    (2) The Government acknowledges that targeting the long-term benchmark return implies accepting the risk of capital losses, in adverse markets, that may be 15 per cent to 20 per cent of the portfolio over a three-year period.","sortOrder":7},{"sectionNumber":"7","sectionType":"section","heading":"Board must consider impacts from its investment strategy","content":"#### 7 Board must consider impacts from its investment strategy\n\n  (1) In undertaking its investment activities, the Board must act in a way that:\n    (a) minimises the potential to effect any abnormal change in the volatility or efficient operation of Australian financial markets; and\n    (b) is unlikely to cause any diminution of the Australian Government’s reputation in Australian and international financial markets.","sortOrder":8},{"sectionNumber":"8","sectionType":"section","heading":"Corporate governance","content":"#### 8 Corporate governance\n\n  (1) The Board must have regard to international best practice for institutional investment in determining its approach to corporate governance principles, including in relation to its voting policy.","sortOrder":9},{"sectionNumber":"9","sectionType":"section","heading":"Reporting","content":"#### 9 Reporting\n\n  The Board must publish quarterly portfolio updates on its website showing:\n  (a) actual returns against benchmark return; and\n  (b) asset allocations by category.","sortOrder":10}],"analysis":{"flash_summary_failed":{"failed":true,"reason":"A positive credit balance is required for all requests, including BYOK, so fallback providers remain available. Add credits at https://vercel.com/d?to=%2F%5Bteam%5D%2F%7E%2Fai%3Fmodal%3Dtop-up to continue.","source":"analysis-cron"},"kimi_summary":{"content_quality":"ok","complexity_score":2,"scope_assessment":{"changed":false,"description":"The legislation remains tightly focused on its original purpose: providing investment guidance for the Disaster Ready Fund. It does not expand beyond setting risk/return parameters, governance standards, and reporting requirements for the Board."},"complexity_factors":["Only 6 defined terms in the interpretation section","No nested exceptions or conditional logic beyond basic 'must' obligations","Single layer of cross-referencing (to the Disaster Ready Fund Act 2019 and Future Fund Act 2006)","Straightforward structure: preliminary provisions followed by specific investment mandates","No temporal limitations or sunset clauses (explicitly noted as exempt from sunsetting)","Clear, directive language throughout with minimal subordinate legislation"],"plain_english_summary":"The Direction tells the Future Fund Board how to invest the Disaster Ready Fund: seek long‑term returns of CPI plus 2–3% after costs while taking sufficient (but not excessive) risk, follow strong corporate governance and market‑conduct standards, and publish regular reports on performance and holdings. It binds the Board, allows Ministers to give further directions, and matters to taxpayers because it aims to grow and safeguard disaster‑resilience funds with public accountability."},"flash_summary":{"complexity_score":4,"scope_assessment":{"changed":false,"description":"The Direction operates under the Disaster Ready Fund Act 2019 (Section 3) and frames the Government’s expectations for investment, risk tolerance and reporting (Section 5). It imposes substantive benchmarks, risk acknowledgements and disclosure requirements but does not amend the Board’s statutory powers in the source text. The Direction therefore constrains the Board’s exercise of discretion within the Act rather than changing the Act’s scope; procedural notes excluding disallowance and sunsetting affect parliamentary oversight mechanisms."},"complexity_factors":["Benchmark range and net-of-costs requirement (Section 6(1)) — sets a numeric long-term target (CPI +2.0% to +3.0%) but as a range introduces choice about where in that range to target.","Acknowledged drawdown size (Section 6(2) and Acceptable level of risk) — explicitly accepts potential capital losses of 15–20% over three years, which is a material downside that affects asset allocation decisions.","Vague prudential standard (Acceptable level of risk, subparagraphs) — requirement to determine an “acceptable but not excessive” level of risk is qualitative and leaves room for Board judgement.","Cross‑reference to other duties (Sections 5(2), Acceptable level of risk(1)(b)) — Board must act consistent with the Act and section 17 obligations, creating dependency on external statutory provisions.","Market and reputational constraints (Section 7(1)) — obligations to minimise abnormal market effects and avoid reputational diminution are subjective and may constrain allowable trades or positions.","Corporate governance standard (Section 8(1)) — requires regard to international best practice and affects voting policy, adding an operational governance dimension.","Reporting obligation (Section 9) — quarterly disclosure of returns v. benchmark and asset allocation imposes ongoing compliance and public scrutiny.","Procedural anomalies (Commencement and Notes to Section 2) — disallowance and sunsetting do not apply by regulation, altering usual parliamentary oversight and expiry mechanisms."],"plain_english_summary":"This Direction tells the Future Fund Board how to invest the Disaster Ready Fund: aim for a long‑term return of CPI + 2–3% per year (net of costs), accept a level of downside risk (including possible 15–20% falls over three years), follow international best practice corporate governance, avoid disrupting Australian financial markets or harming government reputation, and publish quarterly portfolio updates. It affects the Board’s investment choices and reporting; it matters because it sets the Fund’s risk/return target and public transparency requirements."}},"importantCases":[],"_links":{"self":"/api/acts/disaster-ready-fund-investment-mandate-direction-2020","history":"/api/acts/disaster-ready-fund-investment-mandate-direction-2020/history","analysis":"/api/acts/disaster-ready-fund-investment-mandate-direction-2020/analysis","conflicts":"/api/acts/disaster-ready-fund-investment-mandate-direction-2020/conflicts","importantCases":"/api/acts/disaster-ready-fund-investment-mandate-direction-2020/important-cases","documents":"/api/acts/disaster-ready-fund-investment-mandate-direction-2020/documents"}}