19Forestry Growth Fund

19 Forestry Growth Fund

(1) The Corporation shall make available up to $150 million for investments that are directed towards supporting the wood product manufacturing sectors to: (a) modernise and advance its processing capabilities, including new facilities; and (b) increase the value of its outputs, including with respect to wood products used for housing construction.

Note 1: Due to the operation of section 63 of the Act, financial accommodation may only be provided for purposes relating to any of the priority areas of the Australian economy and equity interests may only be acquired where any of the entity’s activities are in a priority area of the Australian economy.

Benchmark return (2) The Corporation must target an average return of 1 per cent below the five‑year Australian government bond rate (according to the size and time of investing) as the benchmark return of investments made under the Forestry Growth Fund over the medium to long term. (3) The Corporation must measure performance against the benchmark in subsection (2) before deducting operating expenses. Risk level (4) In targeting the benchmark return under subsection (2), the Corporation: (a) must operate with a commercial approach, including by undertaking appropriate due diligence, credit and investment risk assessment processes; and (b) must seek to develop a portfolio of investments that is diversified and has, in aggregate, an acceptable level of risk, having regard to the terms of the Act and the objectives of the Forestry Growth Fund under subsection (1); and (c) may determine that the acceptable level of risk of the investments, including both the aggregate level of risk and the risk of individual investments, is higher than for the General Portfolio.

Note: Investments under the Forestry Growth Fund may increase the Corporation’s overall exposure to risk.

(5) For subsection (4), 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. (6) The Corporation must periodically review the Corporation’s investment and operational practices for the purposes of managing the risk of the Forestry Growth Fund over time.