2022 Bill 5

	5


Second Session, 50th General Assembly 1 Charles III, 2022
BILL 5
AN ACT RESPECTING THE ESTABLISHMENT OF THE NEWFOUNDLAND AND LABRADOR FUTURE FUND
Received and Read the First Time................................................................
Second Reading............................................................................................
Committee.....................................................................................................
Third Reading...............................................................................................
Royal Assent.................................................................................................
HONOURABLE SIOBHAN COADY Minister of Finance and President of Treasury Board
Ordered to be printed by the Honourable House of Assembly

EXPLANATORY NOTES

This Bill would enact the Future Fund Act.

This Bill would

· establish a fund to invest revenue from one-time sources and non-renewable resources to benefit future generations and to ensure the province is able to adapt and support economic growth; and

· amend the Financial Administration Act to allow issues of public money to be made from the Consolidated Revenue Fund in respect of contributions to the Newfoundland and Labrador Future Fund in accordance with the Future Fund Act.

A BILL

AN ACT RESPECTING THE ESTABLISHMENT OF THE NEWFOUNDLAND AND LABRADOR FUTURE FUND

Analysis

1. Short title

2. Definitions

3. Conflict with other Acts

4. Newfoundland and Labrador Future Fund

5. Board of trustees

6. Powers and duties of trustees

7. Investment of money in the fund

8. Permitted withdrawals

9. Restrictions on withdrawals

10. Immunity

11. Regulations

12. RSNL1990 cF-8 Amdt.

13. RSNL1990 cP-43 Amdt.

14. Commencement

Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:

Short title

1. This Act may be cited as the Future Fund Act.

Definitions

2. In this Act

(a) "comptroller general" means the Comptroller General of Finance appointed under the Financial Administration Act;

(b) "Crown asset" means an asset owned by

(i) a department of the government,

(ii) a corporation, the ownership of which, or a majority of the shares of which is vested in the Crown and its subsidiaries, or

(iii) a corporation, commission or body, the majority of the members of which, or the majority of members of the board of directors of which are appointed by an Act, the Lieutenant-Governor in Council or a minister;

(d) "extraordinary circumstance" means a circumstance that, in the opinion of the Lieutenant-Governor in Council, has materially impacted or is projected to materially impact the province's fiscal position;

(e) "fiscal year" means fiscal year as defined in the Financial Administration Act;

(f) "fund" means, except where the context indicates otherwise, the Newfoundland and Labrador Future Fund established under section 4;

(g) "gross proceeds" means the amount received from the sale of an asset before any deductions are made;

(h) "minister" means the minister appointed under the Executive Council Act to administer this Act;

(i) "net proceeds" means the amount received from the sale of an asset less any costs and expenses paid or payable relating to the sale of the asset;

(j) "non-renewable resource royalties" means the following cash-based royalties received by the province in a fiscal year as recorded in the accounts of the province in accordance with section 58 of the Financial Administration Act:

(i) royalties from petroleum produced in the offshore,

(ii) quarry royalties, and

(iii) other royalties prescribed in the regulations;

(k) "Treasury Board" means the Treasury Board established under section 3 of the Financial Administration Act; and

(l) "trustees" means the board of trustees referred to in section 5.

Conflict with other Acts

3. Where there is a conflict between this Act or a regulation made under this Act and another Act or regulation enacted before or after the coming into force of this Act, this Act or the regulation made under it shall prevail.

Newfoundland and Labrador Future Fund

4. (1) There is established a fund called the Newfoundland and Labrador Future Fund.

(2) There shall be deposited into the fund

(a) net proceeds from the sale of any Crown asset or group of Crown assets with gross proceeds in excess of $5,000,000; and

(b) the portion of non-renewable resource royalties received by the province in the previous fiscal year as determined in accordance with the regulations.

(3) In addition to the amounts referred to in subsection (2), additional amounts may be deposited into the fund at the discretion of the Treasury Board.

(4) Notwithstanding paragraph (2)(a), in the event of an extraordinary circumstance, the net proceeds from the sale of a Crown asset or a group of Crown assets is not required to be deposited into the fund.

(5) The trustees may maintain a consolidated bank account for the receipt and disbursement of money in the fund.

(6) The annual expenses incurred in the management and operation of the fund shall be paid out of the interest earned from the investments held by the fund subject to the approval of the trustees as to the amount of the expenses.

Board of trustees

5. (1) A board of trustees shall be established to oversee the management of the fund.

(2) The board of trustees shall be comprised of

(a) the deputy minister of the department, who shall be the chairperson;

(b) the assistant deputy minister responsible for treasury management in the department;

(d) the director responsible for treasury management in the department;

(e) one person employed in a department of the government who has expertise in environmental matters appointed by the Lieutenant-Governor in Council; and

(f) one person appointed by the Lieutenant-Governor in Council.

(3) The term of a person appointed under paragraph 2(e) shall be determined by the Lieutenant-Governor in Council.

(4) A person appointed under paragraph (2)(f) shall be appointed for a term of 3 years and is eligible for reappointment.

(5) Notwithstanding the expiry of the term of a person appointed under paragraph (2)(f), the person continues to be a trustee until reappointed or replaced.

(6) A person appointed under paragraph (2)(f) may be remunerated in accordance with the Treasury Board guidelines.

Powers and duties of trustees

6. (1) The trustees shall

(a) report to the minister on a quarterly basis regarding the performance of the fund; and

(b) invest and dispose of the assets in the fund as directed by the Treasury Board.

(2) A trustee, in exercising the powers and discharging the duties of a trustee, shall

(a) act honestly and in good faith with a view to the best interests of the fund; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Investment of money in the fund

7. (1) Money in the fund may, at the direction of the Treasury Board, be invested in bonds, debentures or other securities referred to in subsection 38(3) of the Financial Administration Act.

(2) The investment income from the fund accrues to and forms part of the fund.

(3) The trustees may, with the approval of the minister, lend to a company bonds and securities held by the fund under subsection (1), provided that

(a) neither the company nor the trustees are associates of each other;

(b) the book value of bonds or securities that the trustees lend to any one company is not more than 10% of the book value of the assets held by the fund;

(d) in return for the bonds or securities loaned under this subsection, the fund receives collateral equal in value to not less than 105% of the market value of the bonds or securities loaned by the trustees and 100% of the accrued interest on those bonds or securities and provided that those values continue throughout the period of time that the lending agreement for the bonds or securities is in force;

(e) the collateral referred to in paragraph (d) is a readily marketable investment permitted under subsection (1); and

(f) a market evaluation of the loaned bonds or securities and of the collateral referred to in paragraph (d) is made not less than once a week.

(4) For the purpose of subsection (3), the words "associate" and "company" have the meanings assigned to them under the Securities Act.

Permitted withdrawals

8. (1) Subject to the approvals in subsection (2), money may be withdrawn from the fund to be transferred to

(a) the Newfoundland and Labrador Government Sinking Fund to service the public debt; and

(b) the Consolidated Revenue Fund for one or more of the following purposes, subject to there being an appropriation provided under the Financial Administration Act for the amount being transferred:

(i) to service the public debt,

(ii) to pay expenses that arise as a result of the sale of Crown assets referred to in paragraph 4(2)(a) that were not known or determinable at the time the net proceeds were deposited in the fund,

(iii) to pay any amounts relating to abandonment and decommissioning activities under an oil lease or licence in accordance with the applicable regulations and agreements,

(iv) to fund strategic priorities recommended by the minister, and

(v) to pay an amount required due to an extraordinary circumstance.

(2) Money may only be withdrawn from the fund

(a) under paragraph (1)(a) and subparagraphs (1)(b)(i) to (iii) with the approval of the Treasury Board; and

(b) under subparagraphs (1)(b)(iv) and (v) with the approval of the Lieutenant-Governor in Council.

Restrictions on withdrawals

9. Notwithstanding section 8, money shall not be withdrawn from the fund under subparagraphs 8(1)(b)(ii) to (iv) until one or both of the following conditions have been met:

(a) at least 10 years has elapsed since the coming into force of this Act; or

(b) the balance of the fund is at least equal to the government's financial obligations relating to the unfunded long-term debt maturities for the subsequent 10-year period.

Immunity

10. An action or proceeding does not lie or shall not be instituted against the Crown, a minister, employee, trustee, an entity referred to in subparagraphs 2(b)(ii) and (iii) or any of the entity's directors, board members, officers or employees based on a cause of action arising from, resulting from or incidental to the operation of this Act.

Regulations

11. The Lieutenant-Governor in Council may make regulations

(a) prescribing other royalties for the purpose of subparagraph 2(j)(iii);

(b) for the purpose of determining the portion of non-renewable resource royalties under paragraph 4(2)(b);

(d) generally to give effect to the purpose of this Act.

RSNL1990 cF-8
Amdt.

12. Section 22 of the Financial Administration Act is amended by deleting the word "and" at the end of paragraph (f), deleting the period at the end of paragraph (g) and substituting a semi-colon and the word "and" and by adding immediately after paragraph (g) the following:

(h) issues may be made in respect of contributions to the Newfoundland and Labrador Future Fund in accordance with the Future Fund Act.

RSNL1990 cP-43 Amdt.

13. Schedule C of the Public Service Commission Act is amended by adding immediately after the statutory appointment reference "Forestry Act, section 58" the statutory appointment reference "Future Fund Act, paragraph 5(2)(f)".

Commencement

14. This Act comes into force on a day to be proclaimed by the Lieutenant-Governor in Council.