SYDNEY (Reuters) – The head of Australia’s A$206 billion ($131 billion) sovereign wealth fund had informed the Australian government he will not seek a third term, Treasurer Jim Chalmers said on Monday, and a formal recruitment process to find a successor will begin.
Peter Costello, Australia’s longest-serving treasurer, became the fund’s chair in 2014 and was re-appointed in 2019 for another five years. His current term will end in February.
Costello, as federal treasurer in 2006, oversaw the establishment of the Future Fund with contributions from A$60.5 billion ($38.5 billion) in government surpluses and proceeds of the privatisation of telecom firm Telstra.
“Upon the fund’s inception, Mr Costello spoke about the importance of ensuring that Australia could meet its unfunded superannuation obligations without imposing an undue burden on future generations,” Chalmers said in a statement.
“We thank Mr Costello for his significant contribution … He leaves with the government’s appreciation and respect.”
Last month, Costello criticised the government’s proposed reforms to the Reserve Bank of Australia, which recommended setting a separate rate board with six outside members, saying it ran the risk of undermining monetary policy. Chalmers at the time said the suggestion was “bizarre and wrong” and deflected reporters’ questions on Costello’s reappointment as Future Fund chair.
The Future Fund was set up to cover escalating public service pension liabilities and rivals Australia’s largest pension funds in size.
The sovereign fund returned 6% in fiscal 2023 compared with a target return of 10%. Australia’s similarly sized two largest pension funds, AustralianSuper and Australian Retirement Trust, returned 8.2% and 10%, respectively, over the period.
($1 = 1.5728 Australian dollars)
(Reporting by Renju Jose in Sydney; Editing by Lincoln Feast.)