2012
THE LEGISLATIVE ASSEMBLY
FOR THE AUSTRALIAN CAPITAL TERRITORY

(As presented)
(Ms Meredith Hunter)
Financial Management (Investment) Legislation Amendment Bill 2012

Contents
	Page

Part 1	Preliminary
	1	Name of Act	2
	2	Commencement	2
	3	Legislation amended	2
Part 2	Financial Management Act 1996
	4	Investment of certain public money
Section 38 (2)	3
	5	New section 38 (10)	3
	6	New sections 38A and 38B	3
	7	Investment by territory authorities
Section 58 (2)	4
	8	New section 58 (9)	4
	9	New sections 58A and 58B	4
	10	New part 9A	5
	11	Dictionary, note 2	10
	12	Dictionary, new definitions	11
Part 3	Territory Superannuation Provision Protection Act 2000
	13	Section 3	12
	14	Investment of amounts in superannuation banking accounts
New section 11 (1A)	12
	15	New section 11 (7)	12
	16	New sections 11A to 11C	13
	17	Dictionary, note 2	14
	18	Dictionary, new definition of investment direction	14

2012
THE LEGISLATIVE ASSEMBLY
FOR THE AUSTRALIAN CAPITAL TERRITORY

(As presented)
(Ms Meredith Hunter)
Financial Management (Investment) Legislation Amendment Bill 2012

A Bill for
An Act to amend the Financial Management Act 1996 and the Territory Superannuation Provision Protection Act 2000

    

The Legislative Assembly for the Australian Capital Territory enacts as follows:

Part 1	Preliminary
1	Name of Act
This Act is the Financial Management (Investment) Legislation Amendment Act 2012.
2	Commencement
This Act commences on 1 July 2013.
Note	The naming and commencement provisions automatically commence on the notification day (see Legislation Act, s 75 (1)).
3	Legislation amended
This Act amends the Financial Management Act 1996 and the Territory Superannuation Provision Protection Act 2000.

Part 2	Financial Management Act 1996
4	Investment of certain public money
Section 38 (2)
substitute
	(2)	However, an investment under this section—
	(a)	may only be made to increase or protect the financial wealth of the Territory; and
	(b)	must comply with any requirement in relation to the investment under an investment direction.
5	New section 38 (10)
insert
	(10)	This section is subject to section 38A.
6	New sections 38A and 38B
in part 5, insert
38A	Prohibition on investment of certain public money
	(1) 	The Treasurer must not invest any money held in the territory banking account or a directorate banking account in a prohibited investment.
Note	Prohibited investment—see s 126.
	(2)	If the Treasurer becomes aware that an investment has become a prohibited investment, the Treasurer must divest the Territory of the investment as soon as reasonably practicable.
38B	Exercising security holder vote for investment
If the Territory has a right to vote as a security holder in relation to an investment made under section 38, the Territory must comply with any requirement for voting in relation to the investment under an investment direction.
7	Investment by territory authorities
Section 58 (2)
substitute	
	(2)	However, an investment under this section—
	(a)	may only be made to increase or protect the financial wealth of the territory authority; and
	(b)	must comply with any requirement in relation to the investment under an investment direction.
8	New section 58 (9)
insert
	(9)	This section is subject to section 58A.
9	New sections 58A and 58B
insert
58A	Prohibition on investment by territory authorities
	(1) 	A territory authority must not invest funds of the authority in a prohibited investment.
Note	Prohibited investment—see s 126.
	(2)	If a territory authority becomes aware that an investment has become a prohibited investment, the authority must divest itself of the investment as soon as reasonably practicable.
58B	Exercising security holder vote for investment
If a territory authority has a right to vote as a security holder in relation to an investment made under section 58, the authority must comply with any requirement for voting in relation to the investment under an investment direction.
10	New part 9A
insert
Part 9A	Requirements for investment
126	Meaning of prohibited investment
	(1)	For this Act, an investment is a prohibited investment if—
	(a)	it includes investment in a relevant body; and
	(b)	the person responsible for investing an amount under an investment law is satisfied on reasonable grounds that all or a material part of the relevant body’s revenue for the current financial year is likely to be attributable to any of the following activities:
	(i)	the manufacture or sale of tobacco;
	(ii)	the manufacture or sale of arms or armaments, their components or software;
	(iii)	the manufacture or sale of cosmetics that are produced using animal testing; 
	(iv)	the manufacture or sale of products that are produced using labour in breach of any international treaty or other international agreement, in relation to labour and child labour, to which Australia is a party.
	(2)	Also, an investment is a prohibited investment if it is an investment prohibited under an investment direction.
127	Definitions—pt 9A
In this part:
investment—
	(a)	means investment within the meaning of the Corporations Act, section 9; but
	(b)	does not include a term deposit, bond or similar investment in an authorised deposit-taking institution.
investment direction—see section 129D. 
investment law means—
	(a)	section 38; or
	(b)	section 58; or
	(c)	the Territory Superannuation Provision Protection Act 2000, section 11. 
relevant body means—
	(a)	a company registered under the Corporations Act; or
	(b)	a disclosing entity under the Corporations Act; or
	(c)	a body under the Corporations Act; or
	(d)	a registered scheme under the Corporations Act; or
	(e)	an entity or scheme under a law of a foreign country that is substantially similar to an entity or scheme mentioned in paragraphs (a) to (d).
128	Investment advisory board
The investment advisory board is established.
129	Functions of investment advisory board
	(1)	The investment advisory board has the following functions:
	(a)	prepare and review investment directions;
	(b)	advise the Treasurer about investment and borrowing;
	(c)	any other function given to the board under a territory law.
	(2)	In exercising its functions, the investment advisory board must, as far as practicable, ensure that public money is invested in a way that promotes socially responsible and environmentally sustainable development.
129A	Membership of investment advisory board
	(1)	The investment advisory board is made up of—
	(a)	the director-general; and
	(b)	at least 3, but not more than 6, members appointed by the Treasurer.
Note 1	For the making of appointments (including acting appointments), see the Legislation Act, pt 19.3.  
Note 2	In particular, a person may be appointed for a particular provision of a law (see Legislation Act, s 7 (3)) and an appointment may be made by naming a person or nominating the occupant of a position (see Legislation Act, s 207).
Note 3	Certain Ministerial appointments require consultation with an Assembly committee and are disallowable (see Legislation Act, div 19.3.3).
	(2)	In appointing members to the investment advisory board, the Treasurer must ensure the board includes people with substantial experience or expertise in the following areas:
	(a)	investing in financial assets;
	(b)	managing investments in financial assets;
	(c)	responsible or ethical investing.
	(3)	The Treasurer must not appoint someone to the investment advisory board unless satisfied on reasonable grounds that the person has professional credibility and significant standing in his or her area of experience or expertise.
	(4)	The chair of the investment advisory board is the director-general.
129B	Ending appointment of members
The Minister may end the appointment of a member of the investment advisory board appointed under section 129A (1) (b)—
	(a)	for misbehaviour; or
	(b)	if the member is convicted, or found guilty, in Australia of an indictable offence; or
	(c)	if the member is convicted, or found guilty, outside Australia of an offence that, if it had been committed in the ACT, would be an indictable offence; or
	(d)	if the member is absent from 3 consecutive meetings of the board, otherwise than on approved leave; or
	(e)	for physical or mental incapacity, if the incapacity substantially affects the exercise of the member’s functions.
Note	A person’s appointment also ends if the person resigns (see Legislation Act, s 210).
129C	Investment advisory board procedures
	(1)	Meetings of the investment advisory board are to be held when and where it decides.
	(2)	However, the investment advisory board must meet at least once each year.
	(3)	The investment advisory board may conduct its proceedings (including its meetings) as it considers appropriate.
129D	Investment directions—investment in certain activities
	(1)	The investment advisory board must prepare directions (an investment direction) about—
	(a)	making investments, under an investment law, in relation to relevant bodies with revenue attributable to a relevant activity; and
	(b)	the Territory or a territory authority exercising a right to vote as a security holder in relation to an investment made under an investment law. 
	(2)	The investment advisory board may prepare directions (also an investment direction) about investing under an investment law generally. 	
	(3)	An investment direction may prohibit stated investments or describe the circumstances in which investments are prohibited. 
	(4)	In preparing an investment direction, the investment advisory board must give consideration to an obligation of the Territory under a relevant territory law.
Examples
·	ACT greenhouse gas emissions targets under the Climate Change and Greenhouse Gas Reduction Act 2010
·	a human right under the Human Rights Act 2004
Note	An example is part of the Act, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132).
	(5)	An investment direction must be reviewed at least once each year.
	(6)	An investment direction is a disallowable instrument.
Note	A disallowable instrument must be notified, and presented to the Legislative Assembly, under the Legislation Act.
	(7)	In this section:
gaming equipment—see the Gambling and Racing Control Act 1999, dictionary. 
relevant activity—each of the following is a relevant activity:
	(a)	the manufacture or sale of gaming equipment, its components or software;
	(b)	the operation of gambling facilities;
	(c)	the manufacture or sale of products that are produced using intensive animal farming; 
	(d)	the mining, processing or sale of uranium;
	(e)	the mining, processing or sale of coal; 
	(f)	the extraction, processing or sale of crude oil;
	(g)	the manufacture or sale of timber products, including paper, that are produced using timber harvested from—
	(i)	native old-growth forests; or
	(ii)	plants protected under the Nature Conservation Act 1980 or a law of another Australian or foreign jurisdiction corresponding to that Act.
11	Dictionary, note 2
insert
·	Corporations Act
12	Dictionary, new definitions
insert
investment, for part 9A (Requirements for investment)—see section 127.
investment advisory board means the investment advisory board established under section 128.
investment direction—see section 129D.
investment law, for part 9A (Requirements for investment)—see section 127.
prohibited investment—see section 126.
relevant body, for part 9A (Requirements for investment)—see section 127.

Part 3	Territory Superannuation Provision Protection Act 2000
13	Section 3
substitute
3	Object of Act
The object of this Act is to ensure that funds dedicated to meeting the superannuation liabilities of the Territory, territory authorities and territory-owned corporations—
	(a)	remain dedicated to meeting those liabilities; and
	(b)	are invested in a way that promotes socially responsible and environmentally sustainable development.
14	Investment of amounts in superannuation banking accounts
New section 11 (1A)
substitute
	(1A)	An investment under this section must comply with any requirement in relation to the investment under an investment direction.
15	New section 11 (7)
insert
	(7)	This section is subject to section 11A and section 11B.
16	New sections 11A to 11C
insert
11A	Prioritising investment of amounts in superannuation banking accounts
	(1)	In deciding how to invest an amount in a superannuation banking account under section 11, the director-general must, if satisfied it is prudent, give priority to an investment of a kind identified in a guideline under this section over another investment.
	(2)	The investment advisory board may prepare guidelines for subsection (1) that identify kinds of investments in relevant bodies with revenue attributable to activities that improve environmental or social outcomes.
	(3)	A guideline is a disallowable instrument.
Note	A disallowable instrument must be notified, and presented to the Legislative Assembly, under the Legislation Act.
	(4)	In this section:
investment advisory board—see the Financial Management Act 1996, dictionary. 
relevant body—see the Financial Management Act 1996, section 127.  
11B	Prohibition on investment of amounts in superannuation banking accounts
	(1) 	The director-general of the superannuation directorate must not invest an amount in a superannuation banking account in a prohibited investment.
	(2)	If the director-general of the superannuation directorate becomes aware that an investment has become a prohibited investment, the director-general must divest the Territory of the investment as soon as reasonably practicable.
	(3)	In this section:
prohibited investment—see the Financial Management Act 1996, section 126.
11C	Exercising security holder vote for investment
If the Territory has a right to vote as a security holder in relation to an  investment made under section 11, the Territory must comply with any requirement for voting in relation to the investment under an investment direction.
17	Dictionary, note 2
insert
·	Corporations Act
18	Dictionary, new definition of investment direction	
insert
investment direction—see the Financial Management Act 1996 section 129D. 

Endnotes
1	Presentation speech
	Presentation speech made in the Legislative Assembly on 9 May 	2012.
2	Notification
	Notified under the Legislation Act on	2012.
3	Republications of amended laws
	For the latest republication of amended laws, see www.legislation.act.gov.au.

© Australian Capital Territory 2012