Second

Session, 50th General Assembly

Charles II, 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

Short title

Definitions

Conflict with other Acts

Newfoundland and Labrador Future Fund

Board of trustees

Powers and duties of trustees

Investment of money in the fund

Permitted withdrawals

Restrictions on withdrawals

Immunity

Regulations

RSNL1990 cF-8 Amdt.

RSNL1990 cP-43 Amdt.

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

(

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;

(c) "department" means, except where the

context indicates otherwise, the department presided over by the 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

(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

(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;

(

c) the comptroller general;

(

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

(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

(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;

(

c) investment income of

the bonds or securities loaned under this subsection continues to accrue to

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

(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);

(

c) defining a word or expression used but not

defined in this Act; and

(

d) generally to give effect to the purpose of

this Act.

RSNL1990 cF-8

Amdt.

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.

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.

King's Printer