Senate Environment and Communications Legislation Committee, , 6:44:02 to 6:47:32
Inquiry into the Rewiring the Nation fund's rate of return, which currently sits below the benchmark target due to the early stage of fund deployment.
Topics: Efficiency dividend, Government spending
Speakers: Speaker 27, Hon Sarah Henderson, Speaker 30, Unknown Speaker
>> Um, now I'm just want to ask about the investment mandate. It requires the rewiring the nation fund to have a rate of return of 1.0. Um, as a ratio of direct costs, uh, what is the current actual rate of return?
>> Uh, I think it's slightly below that. I'd have to look that up. Simon might be able to find
>> just a second.
>> And I think what that would reflect is, you know, we're in the early stage of the fund where, you know, the numbers I just shared out of the 10.6 6 only about 1.7 is deployed. So that's what's out there earning interest. So we've got a line of sight on that improving and achieving that 1.00 target.
>> So why are you running under the benchmark rate of return and I'm still waiting to get that number?
>> It's Yeah, thank you S. It's the way it's calculated. So it's it's a calculation of our costs versus our interest income and fees received. Well, we haven't deployed all of our money, we don't achieve, we don't typically receive um interest income on money that's committed but not yet deployed. So, as we deploy that full $10.6 billion, we will start earning the interest on the money that's deployed. Our borrowers will start paying us and that number will come up above that one.
>> And what is your latest annualized
>> Uh gen generally for CFC or
>> I know so for the RTN fund and more generally please
>> will we measure that on on the disclosure that you've just um asked about which is the
>> I'm still waiting to get sorry apologies I've jumped back I'm still waiting to get the uh the uh
>> trying to get that for you soon as
>> the actual rate of return for the RTA fund RTN fund >> um while while we wait for that number. >> do you have the annualized return
>> for the rewire in the nation
>> and and also across the board? uh across
the board I don't have the percentage number but I can tell you that our um adjusted profit or our normalized profit from operations was uh
you're doing that I've got the stat on the uh uh river the nation it's um a ratio uh is 0.773. So we're required to match costs at at a 1% 1:1 ratio. Uh currently we're at 0.773.
>> So are you going to be doing anything to to raise that number? That goes back to
what I said earlier, Senator. As we deploy more of the committed funds that are not yet deployed and they'll earn interest, that number will come up above one. I'd add that that number also excludes any administr administrative funding that we were receiving from the Commonwealth to support that. And normalized uh profit last year is $153.7 million. That's in our annual report.