The Federal Government has opted for a professional businessman – albeit one who knows a thing or two about investments – rather than an investment management professional to chair its Future Fund.

Peter Costello, the Treasurer, announced on Sunday that David Murray, the former chief executive of the Commonwealth Bank, would chair the fund’s board and the rest of the directors would likely be announced by the time the legislation passes parliament. The legislation is still being drafted, however, the Government is hopeful of its introduction this year. Murray starts work immediately, Costello’s statement saying he “will be engaged as a consultant to the Department of Finance and Administration to provide advice on the establishment (of the fund)” until he commences his role after the legislation is introduced. Although Murray was widely tipped for the role, several investment management professionals were also mentioned as possibilities and may still be considered for other directorships. They include Charles Macek, the founder of the former County Investment Management who is currently a Telstra director and chair of an ethical investment fund, and Bill Ferris, private equity specialist and former chair of Austrade. In fact, Murray’s confirmation probably makes it more likely that Costello will want one or two experienced investment managers on the board, even though the Future Fund will not be short of professional advisers. Watson Wyatt is already working on the “investment mandate” for the fund, with its advice to be provided to Treasury, and presumably afterwards to the board. And another consulting firm is expected to be appointed to assist in manager selection and portfolio construction, with tenders for this role yet to be called. Given the very public and political nature of the fund, Murray’s appointment is seen as a safe choice for the Government. He was chief executive of Commonwealth between 1992 and 2005, guiding the bank through privatisation in 1996 and modernisation, including sensitive staff cuts and branch closures. Costello said: “Over 40 years (Murray) has made an outstanding contribution to the Commonwealth Bank of Australia … (He) will bring to this new position substantial experience in the finance and banking sector and considerable knowledge of financial markets.”

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