Investment Funds Legislation Amendment Bill 2021: Submission to the Senate Inquiry

This submission to the Senate inquiry into the Investment Funds Legislation Amendment Bill 2021 responds to Schedule 3, which amends the Medical Research Future Fund Act 2015. Research Australia supports the Bill’s aims of giving greater certainty to annual disbursements from the Medical Research Future Fund (MRFF) and reducing their dependence on short-term market volatility, which should allow a more aggressive investment strategy and higher long-term returns. It explains that the MRFF’s conservative investment mandate, a benchmark of the Reserve Bank cash rate plus 1.5 to 2.0 per cent, has not delivered the $1 billion a year originally envisaged from $20 billion in capital. In October 2020 only $455 million was determined to be available for 2021–22, requiring a $172.5 million top-up from consolidated revenue. It compares MRFF returns since inception of 4.8% a year with Future Fund returns of 8.4%. Because the Bill repeals Part 3 of the Act and transfers disbursement decisions to the Finance Minister and Treasurer without any requirement to preserve capital, it recommends that new section 15B be amended to require the responsible Ministers to take into account maintaining the nominal long-term value of the MRFF’s capital when determining disbursements.