Australia Already Has a Sovereign Wealth Fund. It Needs a Clearer Job.

Every few months, a commentator or politician calls for Australia to create a sovereign wealth fund. Most of these calls overlook an inconvenient fact. Australia already has one, it has performed well, and it is now larger than the economies of many nations.

The more useful question is not whether Australia should have a sovereign wealth fund. It is whether Australia’s public funds have clear jobs, and whether together they add up to a national strategy. On current evidence, they do not.

At a glance

• The Future Fund was established in 2006 to meet the pension liabilities of Commonwealth public servants and defence personnel. It held about $252 billion at 30 June 2025.
• Its Board of Guardians now manages a family of government investment funds created at different times for different purposes.
• Since 2024, the Future Fund must consider national priorities such as housing, the energy transition and security. That shift is significant and deserves careful scrutiny.
• Redirecting existing fund assets does not create new wealth. It moves an obligation from one part of the balance sheet to another.
• Australia’s priority should be a single national investment architecture, not another fund announced in response to a headline.

The Future Fund was built for a specific obligation

The Future Fund was created with the proceeds of budget surpluses and the final sale of the government’s shares in Telstra. Its purpose was precise: to meet the superannuation pensions owed to Commonwealth public servants and defence personnel, a liability that would otherwise fall on future taxpayers. Source: Department of Finance

That purpose shaped everything about it. A fund with a known future liability can take a long view, accept short-term volatility and invest globally across asset classes. It is governed by an independent Board of Guardians and managed by the Future Fund Management Agency, which keeps investment decisions at arm’s length from the government of the day.

By most measures, it has delivered. The fund grew to around $252 billion by 30 June 2025, after a return of more than 12 per cent in that financial year. Source: Capital Brief

Australia has a family of funds, not a strategy

Over time, the Board of Guardians has been asked to manage a growing list of other public funds. Source: Department of Finance

Fund	Primary purpose
Future Fund	Meet unfunded Commonwealth public sector superannuation liabilities
Medical Research Future Fund	Provide sustainable funding for health and medical research
Future Drought Fund	Build drought resilience in agriculture and regional communities
Housing Australia Future Fund	Fund social and affordable housing
DisabilityCare Australia Fund	Support the costs of the National Disability Insurance Scheme

Each fund was created for a sensible reason by a government responding to a real need. The problem is that they were designed one at a time. There is no overarching framework that explains how the funds relate to one another, how they contribute to national capability, or where new public savings should go.

That gap matters because Australia is entering a decade of three simultaneous transitions: the energy transition, the artificial intelligence transition and a gradual shift in the long-term value of its mineral exports. None of the existing funds was designed to manage those transitions together.

Purpose determines design

In business, nobody confuses operating cash, an emergency reserve and a long-term investment portfolio. Each serves a different need and is managed differently. Public funds work the same way.

• A liability-matching fund, such as the Future Fund, must align its investments with when its obligations fall due.
• A stabilisation reserve must hold assets that can be sold quickly in a downturn, accepting lower returns for that flexibility.
• An endowment fund that pays a regular amount to programs or citizens needs a spending rule that survives years of weak returns.
• A strategic capability fund that invests in national priorities must balance financial return against public benefit, and say openly how it does so.

When a single fund is asked to perform several of these roles without clear rules, the trade-offs disappear from view. Returns are diluted, accountability weakens and public trust erodes. That is the most common way good institutions decline.

The 2024 mandate change: significant and worth watching

In 2024, the Treasurer and the Finance Minister amended the Future Fund’s investment mandate. The fund must now take into account national priorities, including housing, the energy transition and security, while continuing to pursue strong long-term returns. Source: The Treasury

There is a reasonable case for this. A fund of this size investing in Australian housing and energy infrastructure can support national goals and still earn good returns.

But the change also carries risk, and that risk should be stated in plain language. The Future Fund’s assets already back a real obligation. If directing capital toward national priorities lowers returns, the pension liability does not shrink. It returns to the budget and, ultimately, to taxpayers.

Redirecting assets is not creating wealth

This is the point most often missed in public debate. Changing a fund’s purpose moves wealth around. It does not create it.

Any serious proposal to repurpose public capital should be required to show three things:

1. What becomes available for the new purpose, and on what terms.
2. What obligations remain, and how they will now be funded.
3. Who carries the risk if the new investments underperform.

Without those three answers, a proposal is a political announcement, not a financial strategy.

A national investment architecture for Australia

My recommendation is that Australia stop creating funds one at a time and instead publish a single national investment architecture. It would set out:

• The job of each existing public fund, and what it must never be used for.
• Where new public savings go, including any share of resource windfalls saved under an agreed rule.
• How the funds contribute to national capability, from skills and research to energy, housing and sovereign technology.
• One consolidated, plain-language report to citizens each year, showing contributions, returns after fees, withdrawals and outcomes across all funds.

This would cost very little to establish. It would make the trade-offs visible, strengthen accountability and signal to citizens and global investors that Australia manages public wealth with the discipline of a mature economy.

What leaders should do next

• The Commonwealth should commission an independent review of the full family of public investment funds, assessing purpose, overlap and contribution to national capability.
• Parliament should require any future change to a fund’s mandate to be accompanied by a published assessment of the impact on its original obligation.
• Policy advocates proposing a new sovereign wealth fund should first explain why the job cannot be done within the existing architecture.

The full series

• What Norway’s sovereign wealth fund teaches Australia
• Turning Australia’s mineral wealth into national wealth
• Preparing Australians for the artificial intelligence transition
• Governance is what makes a sovereign wealth fund last

About the author

Dainu Devis is an Australian emerging technology CEO, technologist and business and economic strategist. As Chief Executive Officer of Sharktech Global and Divine Lab Worx, he brings a decade of international business consulting and political strategy advisory experience to building technology businesses. His strength is concurrent product and process design, bringing the product, delivery processes and route to market together from the start.