Shake-up on horizon for NSW investment management

Daniel Mookhey, NSW treasurer, is encouraging TCorp to focus on its ESG framework in a bid to become a leader in Asia Pacific. 

TCorp is the investment management division for the NSW public sector and manages over $108 billion in assets. 

Speaking at the Citi Investment Conference in Sydney, Mookhey said: “We are eager to look at the ESG framework. We are certainly not directing it from a policy perspective, but I want to make sure it takes account of ESG risks. Given the size and scale of the NSW fund management industry, if we get this right, then it’s a huge competitive advantage for us in Asia Pacific.

“We want to make sure that TCorp and the state’s own super funds are properly accounting for climate risk and what that means for our investors. They are doing good work, don’t get me wrong, but this is a pressing need that we have to respond to.

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“TCorp has $108 billion and the government’s super funds are also roughly $100 billion, so they have big roles to play. We need them to do well and I want to make sure we are doing the world’s best practice when it comes to how we assess this and take it into account.”

He also said he expects to see a “major fund management shake-up” to the NSW’s own funds.

“We have about $108 billion dispersed across six or seven separate investment funds and we think we can get more efficiency, better returns and pool risk by looking at how we can combine those. Once we do that, we are in a better position to offset some of the impact of the debt from the NSW Generations Fund.”

The NSW Generations Fund was set up by former NSW Treasurer, and later Premier, Dominic Perrottet, in 2018 with the intention to lower the debt burden for future generations. 

Asked what he would do with the fund, Mookhey said: “The strategy made sense at the time but what has happened in the intervening years is the former government had borrowed money and put it into the fund which is to use leverage. The government had intended to borrow $50 billion over the course of the next four years and deposit it into the fund.

“This is a reason why the government’s borrowing costs are going up.

“We are in the process of a two-step strategy; we are not making any deposits into the NSW Generation fund this year which will be around a $9 billion saving, and secondly, in the next budget, we will be doing a fund management shake-up. In terms of the money that is currently there, which is $16 billion, we are not intending to liquidate the fund.”