Planning for the future: maximising native title compensation through the use of future funds

In the mid 2000s the Australian Government deliberated how to meet the financial needs of future generations. Australia’s Future Fund was initially established in 2006 and exists to fund:

Unfunded Superannuation Liabilities
Major infrastructure projects
Education
Disability care
Medical research

A number of native title groups have seeded their own Future Funds and are growing an asset base to meet the needs of future generations. We will discuss the governance policies, investment strategies and transparent reporting structures of Future Funds, including their ability to take a long term view of investments and ride out world economic cycles.

In Griffiths v Northern Territory of Australia (Timber Creek Decision) the Federal Court ordered that the Northern Territory Government pay $3.3M including $1,488,261 for interest, to the Traditional Owners as compensation. The court considered that ‘the appropriate interest calculation is simple interest’ as there was insufficient commercial activity to justify compounding returns. 

In this presentation we will explore how investing a portion of available funds in a Future Fund may influence the courts to apply compound interest. Economic modelling will demonstrate that with a Future Fund the settlement amount could’ve been entirely different.