17General Portfolio

17 General Portfolio

Targeted financing levels (1) The Corporation must allocate investments under the General Portfolio so as to target the following funding levels over the medium to long term: (a) medical manufacturing—$1.5 billion; (b) value adding in resources—$1 billion; (c) critical technologies in the national interest—$1 billion; (d) advanced manufacturing—$1 billion; (e) agriculture, forestry, fisheries, food and fibre—$500 million.

Note: These target areas do not correspond directly with the priority areas of the Australian economy. It might be possible to count a particular investment in a single priority area of the Australian economy towards the target set out in any one of paragraphs (a) to (e), or to the targets set out in more than one of paragraphs (a) to (e).

Limits on concessional financial accommodation (2) In relation to investments under the General Portfolio, the Corporation must not provide financial accommodation on concessional terms unless it is satisfied that: (a) this is the most appropriate way of achieving particular public policy outcomes that the Corporation is seeking to achieve; and (b) based on a reasonable qualitative assessment, the level of concessionality is commensurate with the anticipated economic benefits and public policy outcomes; and (c) the concessionality provided is the minimum that would achieve those benefits and outcomes and allow the investment proposal to proceed. Benchmark return (3) The Corporation must target an average return of between 2 and 3 per cent above the five‑year Australian government bond rate (according to the size and time of investing) as the benchmark return of the General Portfolio over the medium to long term.

Note: The Ministers intend to review the portfolio benchmark return 3 years after this instrument commences.

(4) The Corporation must measure performance against the benchmark in subsection (3) before deducting operating expenses. Risk level (5) In targeting the benchmark return under subsection (3), the Corporation must: (a) operate with a commercial approach, including by undertaking appropriate due diligence, credit and investment risk assessment processes; and (b) seek to develop a General Portfolio that is diversified and has, in aggregate, an acceptable but not excessive level of risk. (6) For subsection (5), the level of risk deemed acceptable by the Corporation may be higher than the risk tolerance of commercial banks and private sector investors, if this higher risk tolerance supports the objects of the Act and this instrument. (7) Subject to subsections (5) and (6), the Corporation may consider that higher risks than are acceptable for other investments would be appropriate for: (a) investments in emerging technologies and industries; or (b) investments that support Australia’s strategic interests; or (c) investments with long-term payback periods. (8) The Corporation must periodically review the Corporation’s investment and operational practices for the purposes of managing the risk of the General Portfolio over time. Impact of the Corporation’s investment practices (9) When performing the Corporation’s investment functions or exercising the Corporation’s investment powers in relation to the General Portfolio, the Corporation must: (a) consider the potential effect of the Corporation’s investment practices on: (i) other market participants; and (ii) the efficient operation of the Australian financial market; and (b) seek to avoid displacing alternative private and public sector financing in each priority area of the Australian economy, to the extent that this is reasonably practicable.