This instrument is the National Reconstruction Fund Corporation (Investment Mandate) Direction 2026.
Note: Neither section 42 nor Part 4 of Chapter 3 of the Legislation Act 2003 (which deal with the disallowance of legislative instruments and the sunsetting of legislative instruments) applies in relation to this instrument.
2 Commencement
(1) Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
Note: This table relates only to the provisions of this instrument as originally made. It will not be amended to deal with any later amendments of this instrument.
(2) Any information in column 3 of the table is not part of this instrument. Information may be inserted in this column, or information in it may be edited, in any published version of this instrument.
3 Authority
This instrument is made under subsection 71(1) of the National Reconstruction Fund Corporation Act 2023.
4 Schedules
Each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.
5 Object
The object of this instrument is to ensure that the Corporation performs the Corporation’s investment functions and exercises the Corporation’s investment powers:
(a) in relation to the General Portfolio, Forestry Growth Fund and Net Zero Fund—in a commercial manner to deliver a positive return to the Australian Government over time; and
(b) in relation to the Economic Resilience Program—in a responsible manner to deliver a positive return contributing to Australia’s strategic or economic resilience; and
(c) so as to invest to support, diversify and transform Australia’s industry and economy.
6 Simplified outline of this instrument
The Act established the Corporation to facilitate increased flows of finance into priority areas of the Australian economy. The priority areas are declared in the National Reconstruction Fund Corporation (Priority Areas) Declaration 2026.
The Act:
(a) permits the Ministers, by legislative instrument, to give the Board directions about the performance of the Corporation’s investment functions or the exercise of the Corporation’s investment powers (or both); and
(b) requires the Ministers to give at least one such direction.
The directions together constitute the Investment Mandate. This instrument sets out such directions.
The Corporation is bound by the Investment Mandate. The Board must take all reasonable steps to ensure that the Corporation and its subsidiaries comply with the Investment Mandate. The Board can be directed, under subsection 74(3) of the Act, to:
(a) explain to the Ministers any failure to comply with the Investment Mandate; and
(b) take specified action to ensure compliance.
The Board’s investment policies must also be consistent with the Investment Mandate.
7 Definitions
Note: A number of expressions used in this instrument are defined in section 5 of the Act, including the following:
(a) Account;
(b) Australia’s greenhouse gas emissions reduction targets;
(c) Board;
(d) Commonwealth entity;
(e) Corporation;
(f) Corporation body;
(g) Corporation’s investment functions;
(h) Corporation’s investment powers;
(i) Finance Minister;
(j) financial accommodation;
(k) Investment Mandate;
(l) investment of a Corporation body;
(m) Ministers;
(n) national security;
(o) priority area of the Australian economy;
(p) uncommitted balance.
In this instrument:
Act means the National Reconstruction Fund Corporation Act 2023.
Corporation’s investment practices means the performance of the Corporation’s investment functions and the exercise of the Corporation’s investment powers.
Department of Finance means the Department administered by the Finance Minister.
Economic Resilience Program, at a particular time, means all of the investments made available under subsection 18(1).
Forestry Growth Fund, at a particular time, means all of the investments made available under subsection 19(1).
General Portfolio, at a particular time, means all of the investments of all Corporation bodies at that time, other than those made available under subsections 18(1), 19(1) and 20(1).
Note: These subsections apply to investments allocated under the Economic Resilience Program, Net Zero Fund and Forestry Growth Fund.
investment means an investment of a Corporation body.
Net Zero Fund, at a particular time, means all of the investments made available under subsection 20(1).
Sub‑funds means the Economic Resilience Program, Forestry Growth Fund and Net Zero Fund.
Part 2—Directions
Division 2.1—General Provisions
8 Introduction
The Corporation will crowd in finance to transform and diversify Australia’s industry and economy, and support the development of productive enterprises in the priority areas of the Australian economy that deliver high‑value, internationally competitive products and services across the value chain. The Corporation must have regard to public policy outcomes when making investment decisions.
9 Investment considerations
(1) The Corporation must have regard to the following matters when performing the Corporation’s investment functions or exercising the Corporation’s investment powers (or both):
(a) the matters that the Board must have regard to, in performing its functions, under subsections 17(3A) and (4) of the Act; and
(b) the desirability of supporting:
(i) sustainability and circular economy principles and solutions; and
(ii) regional development; and
(iii) national security.
(2) In addition to the matters specified in subsection (1), the Corporation must have regard to the desirability of supporting communities, regions, industries and workers that are, or will be, significantly affected by Australia’s transition to a net zero emissions economy when performing the Corporation’s investment functions or exercising the Corporation’s investment powers in relation to investments under the Net Zero Fund and the Economic Resilience Program.
10 Corporation must take medium‑ to long‑term outlook
(1) The Corporation must take a medium‑ to long‑term outlook in relation to the Corporation’s investment practices.
(2) Subsection (1) does not prevent the Corporation from making or realising particular investments over a shorter term when this would be consistent with the Act and this instrument.
Note: Example: Realising investments when there are viable opportunities to do so and when this would be consistent with the Act and this instrument.
11 Corporation not to damage Commonwealth’s reputation
The Corporation must not, through the Corporation’s investment practices, act in a way that is likely to cause damage to the Commonwealth’s reputation.
12 Corporation must collaborate and cooperate
(1) Where it would be practical and appropriate in order to facilitate the Corporation’s investment practices, the Corporation must seek to cooperate and collaborate with other Commonwealth entities, and with any State or Territory entities, that are also able to support investments in the priority areas of the Australian economy.
(2) Without limitation, for the purposes of subsection (1), Commonwealth entities include but are not limited to the following:
(a) the Australian Renewable Energy Agency;
(b) the Clean Energy Finance Corporation;
(c) the Northern Australia Infrastructure Facility;
(d) Export Finance Australia;
(e) Housing Australia;
(f) the Regional Investment Corporation;
(g) the Net Zero Economy Authority.
(3) For subsection (1), each of the following is a State or Territory entity:
(a) a State or a Territory;
(b) a body corporate established for a public purpose by or under a law of a State or a Territory.
(4) Where the Net Zero Economy Authority has engaged with the Corporation on opportunities that support the transition to net zero emissions, the Corporation will consider those opportunities.
13 Limits on equity investments
(1) The Corporation must not acquire an equity interest in an entity if this would result in Corporation bodies and any other Commonwealth entities together either:
(a) holding a majority of the equity interests in the entity; or
(b) being in a position to control the entity.
(2) Subsection (3) applies if:
(a) a Corporation body holds one or more equity interests in an entity; and
(b) the Corporation body becomes aware that holding those equity interests results in the situation referred to in subsection (1).
(3) The Corporation body must:
(a) realise sufficient equity interests so that the situation no longer exists; and
(b) do so as soon as reasonably practicable in the circumstances after the Corporation body becomes aware of the fact.
(4) For this section, control has the same meaning as in the definition of “subsidiary” in the Public Governance, Performance and Accountability Act 2013.
14 Limits on guarantees
The Corporation must:
(a) not give guarantees unless it is satisfied that this is the most appropriate way of achieving particular public policy outcomes that the Corporation is seeking to achieve; and
(b) ensure that any guarantee that it does give is appropriately limited and quantifiable; and
(c) ensure that the total of the Corporation’s liabilities (whether actual or contingent) that are in respect of guarantees does not, at any time, exceed 5 per cent of the amount standing to the credit of the Account.
Note: Guarantees pose a particular risk to the Corporation’s balance sheet and, as such, restrictions on their use are appropriate.
15 Australian industry participation
(1) The Corporation must ensure that a Commonwealth Australian Industry Participation (AIP) plan is completed for an investment where required by the Australian Government’s AIP plan policy.
(2) The Corporation must consult with the Department of Finance about the application of the Australian Government’s Buy Australian Plan.
16 Providing information to the Ministers
(1) The Minister administering the Act or the Finance Minister may, at any time and after consultation with the other Minister, request information from the Corporation about the performance of the Corporation’s investment functions or the exercise of the Corporation’s investment powers (or both).
(2) The Corporation must provide its response to the request for information to the Ministers within 30 days.
(3) Within one month after the end of each quarter, unless otherwise requested by the Ministers in writing, the Corporation must provide a briefing to the Ministers about the performance of the Corporation’s investment functions and the exercise of the Corporation’s investment powers in a form approved by the Ministers.
Division 2.2—General 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.
Division 2.3—Sub-funds
18 Economic Resilience Program
(1) The Corporation shall make available up to $1 billion for investments directed towards supporting manufacturing or logistics businesses to:
(a) respond to market disruption; or
(b) maintain and build industrial capabilities that contribute to Australia’s national interests, particularly Australia’s strategic or economic resilience.
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.
Note 2: Under the Economic Resilience Program, the Corporation will make impactful investments which contribute to Australia's strategic or economic resilience, including in sectors where some level of domestic capability is a necessary or efficient way to protect the economic resilience and security of Australia and the private sector will not deliver the necessary investment in the absence of government support. This will likely reduce the Corporation’s ability to crowd in finance under the Economic Resilience Program.
(2) Investments under the Economic Resilience Program must be financial accommodation in the form of a loan with zero per cent interest.
Note: There is no benchmark rate of return for the Economic Resilience Program because investments under the program involve the provision of zero interest loans.
Risk level
(3) In relation to investments under the Economic Resilience Program, the Corporation:
(a) must undertake appropriate due diligence and 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 Economic Resilience Program 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 1: Investments under the Economic Resilience Program may increase the Corporation’s overall exposure to risk.
Note 2: This reflects the different risks of investments made under the Economic Resilience Program compared to those under the General Portfolio, including concentration risks and regulatory risks.
(4) For subsection (3), 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.
(5) The Corporation must periodically review the Corporation’s investment and operational practices for the purposes of managing the risk of the Economic Resilience Program over time.
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.
20 Net Zero Fund
(1) The Corporation shall make available up to $5 billion for investments that are:
(a) directed towards supporting either:
(i) large industrial facilities to decarbonise, improve energy efficiency, and transition to net zero; or
(ii) the scaling up of domestic manufacturing of renewables and low emissions technologies; and
(b) for a purpose relating to a priority area of the Australian economy in subsections 6(5) or (8) of the National Reconstruction Fund Corporation (Priority Areas) Declaration 2026.
Note: The Net Zero Fund is intended to support investments in sectors that have the greatest opportunity and need for decarbonisation, those most impacted by the economy’s transition to a net zero economy, and where public investment is likely needed for the sector to make a significant contribution to emissions reduction at an efficient cost.
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 Net Zero 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 Net Zero 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 1: Investments under the Net Zero Fund may increase the Corporation’s overall exposure to risk.
Note 2: This reflects the different risks of investments made under the Net Zero Fund compared to those under the General Portfolio, including concentration risks and regulatory risks.
(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 Net Zero Fund over time.
21 Sub‑fund accounting
The monetary amounts specified for each Sub‑fund do not limit the Corporation’s investments in priority areas within the scope of the Sub‑funds. Once the amount specified for a Sub‑fund has been exhausted, investments can still be made in the priority areas relevant to that that Sub‑fund under the General Portfolio.
Schedule 1—Repeals
National Reconstruction Fund Corporation (Investment Mandate) Direction 2023