NSWALC MONEY STORY

1. NSWALC MONEY STORY

2. How much is in the NSWALC Account As at the end of 2007-08 the balance was $ 614,461,000

3. Cumulative Return Index 190 170 150 Mercer Median Capital Stable Manager 130 NSWALC Fund 110 Tcorp Medium-term Growth 90 Tcorp Long-term Growth 70 50 Jun 1998 Jun 1999 Jun 2002 Jun 2005 Jun 2000 Jun 2001 Jun 2004 Jun 2006 Jun 2007 Jun 2003 Jun 2008 How We Are Going?

4. Governance Structure NSWALC Board Investment Committee Finance Committee Audit Committee Governance Committee Investment Charter Investment Policy Statement Independent Chair Two Board Members CEO : CFO : CIO Advisors Risk Management Plan Regulatory parameters

5. Spending Policy • Ensure the maintenance of an Intergenerational Trust. • Provide confidence that the fund is well governed and prudent. • A spending policy maintains the balance between the interest of the current and future beneficiaries. • Smooth expenditure. • Clear signal when reduction is required.

6. SPENDING RULE Future Spend = [ 70% x Indexed spending in the previous year] + [30% x NSWALC Account Balance x 5%] ( 5% - Long Term Spending Rate)

7. Investment Objective • Click to edit Master text styles • Second level • Third level • Fourth level • Fifth level Achieve a return (net of investment expense) of at least 5% p.a. plus CPI over a rolling 5 year period We must practically achieve around a 8-9% return per year 7

8. Why ? • NSWALC is a long term investor • Sustainable and perpetual investment portfolio • To provide sufficient growth and income to meet the needs of the network • To provide for the next generation • Therefore the longer term investment horizon • Click to edit Master text styles • Second level • Third level • Fourth level • Fifth level 8

9. Land Tax Revenue ceased on 31/12/98

10. The Money Story First 15 YEARS 7.5% of NSW Government Land tax Revenue provided to NSWAC under the NSWALRA • Total Allocation from Land Tax Revenue over 15 years - $ 537,010,000 • Allocation to the Investment Fund from Land Tax Revenue - $ 268,505,000 • Allocation to the Administrative Fund from Land Tax Revenue - $ 268,505,000

11. The Money Story Investment Fund • Land Tax - $ 268,505,000 • Interest/Income - $ 345,956,000 $ 614,461,000 (Approximate figures) Growth of Fund over Government Allocation 129 % The value of the investment now more than double the original allocation provided by government

12. The Money Story This amount of money that has been drawn from the Investment Fund to meet the costs of the Administration of NSWALC, RALC’s and LALC’s, since 1998. Post 31 December 1998 The income stream from the investment fund which became available to NSWALC • Income from the Investment Fund drawn down 1998-2008 : $ 238,502,000

13. The Money Story This is the amount of money that has been spent since 1983. Comparative Allocations between NSWALC and R/LALC’s from 1983 to 2008 • NSWALC $ 210,485,00042% • R/LALC’s $ 289,827,00058% • TOTAL $ 500,312,000

14. Total Budget $ 41.5M

15. Future Scenario • The prospect for the immediate future is not as good as the outcomes from previous years has been. • A reduction in income is expected the next few years. • Seeking to limit expenditure to 5% of the fund balance • That is we need to trim at least the NSWALC Budget significantly.

16. Practical Philosophy • Must provide for the future as well as the present. • NSWALC is required to adopt a • trustee, • fiduciary, • custodian role. • Sustainability • Must ensure the funds are there for our children and our childrens’ children