A decision to elevate housing, clean energy and infrastructure to priority status for the federal government's $230 billion investment fund will be overturned if the coalition returns to power.
The Albanese government insists maximising returns will always come first under its revamp of the Future Fund, unveiled on Thursday.
The opposition is critical of the changes, with the shadow treasurer accusing the government of directing investment into "pet projects".
"This Labor government will be raiding Australia's nest egg to cover for its economic failures, raiding Australia's net egg in the Future Fund to invest in the treasurer and the prime minister's pet projects," Angus Taylor told reporters on Thursday.
He vowed to overturn the changes and restore the existing mandate focused solely on investment performance if the coalition wins the federal election due by May.
Set up using the proceeds from the sale of Telstra in 2006 to cover unfunded public service superannuation liabilities, the pool of public funds has since ballooned to $230 billion.
By the early 2030s, its value is expected to reach $380 billion.
Climateworks Centre sustainable finance lead Cassandra Williams labelled the move a "no-brainer".
"This is Australians' money, and it will help future-proof the country's economy, setting it up for success in the decades to come," she said.
Sovereign wealth funds in New Zealand, Canada and Norway are investing in the future of their economies and Australia was "keeping up".
Green energy, circular economy, climate tech were forward-looking investments that would deliver sustainable returns, Ms Williams said, highlighting strong performance of public equity net zero transition and Paris agreement-aligned indices.
"We can't continue to be backward-looking in our investments," she told AAP.
Treasurer Jim Chalmers said the Future Fund changes were related to "churn and change in the global and domestic economies".
"My job is not to preserve what I've inherited, it's to improve it, and that's what we're doing," he said on Thursday.
Dr Chalmers stressed the expectations on rate of return or risk had not been tampered with.
Rather, in scenarios where the fund weighs up investments with similar rates of return and similar risk profiles, it would "make sure we're continuing to build housing stock, we're continuing to get the energy transformation right".
"This is about modernising the Future Fund and making sure it serves our national economic interests for the ultimate benefit of the Australian people," Dr Chalmers said.
The sovereign wealth fund will also become an ongoing feature of Australia's economy and drawdowns will be deferred until at least 2032/33.
Earlier in 2024, former climate change minister and previous Net Zero Economy Agency boss Greg Combet was picked to replace former Future Fund chairman and founder Peter Costello.
Mr Combet welcomed Thursday's news.
"The announcements by the government mean that the Future Fund will be in place for years to come," he said.
Mr Combet said the decision to defer withdrawals would allow the fund to focus more on and allocate more resources to the areas of national priority identified in the new investment mandate.
