Melbourne
Future Fund has allocated investments in several infrastructure projects. Pixabay

The Australian government has announced plans to direct the AU$230 billion Future Fund to invest in housing, infrastructure, and green energy projects, under a new investment strategy focused on finding profitable opportunities in these key areas.

The focus will be on key national priorities, including boosting the supply of domestic housing, supporting the transition to clean energy, and improving local infrastructure to enhance economic resilience and security, The Guardian reported.

The public wealth fund, which is about one-tenth the size of Australia's economy, will get a new investment plan and a statement of expectations.

The government's promise not to tap into the fund before 2032-33 will provide greater "certainty," said Greg Combet, the fund's chair and a former Labor minister. "We have also long recognized the importance of environmental, social and governance issues in our investment process and will add resources in this area."

Treasurer Jim Chalmers and Finance Minister Katy Gallagher confirmed in a joint statement that the fund's main goal was to maximize returns, with the growth rate benchmark and risk profile remaining unchanged.

The changes would direct more investment to where it's needed most, without compromising on the returns, they pointed out.

The Future Fund has allocated investments to Tilt Renewables, a company that generates 1.8 gigawatts (GW) of electricity through a combination of wind, solar, and battery storage systems. Additionally, the fund had invested in the development of Melbourne and Perth airports.

The Future Fund was created in 2006 and currently manages AU$230 billion, making it the government's largest financial asset. It was expected to reach AU$380 billion by 2032-33, with a growth return of 4% to 5% above inflation over the long term, ABC News reported.

The fund's main goal was to provide pensions for public servants and support future taxpayers, as the country faced an aging population and growing budgetary pressures.

The government had neither accessed or contributed to the fund since its inception. Its operations had been independently managed, with changes to its mandate occurring only rarely. The most recent change came in 2017 when the Turnbull government reduced the target return from 4.5%-5.5% above inflation to 4%-5%, reflecting lower interest rates at the time.