Federal Finance Minister Lindsay Tanner says the government will increase the independence of the Future Fund to remove doubt over its ability to make its own decisions, particularly on Telstra.

The move comes amid negotiations on regulatory changes expected to result in Telstra being structurally separated.

Telstra, now a public company, is 10 per cent owned by the sovereign wealth fund.

Mr Tanner told a lunch in Canberra on Wednesday that the board of the Future Fund, set up three years ago to manage federal public sector superannuation assets, already made its investment decisions independently.

But the government was examining further steps that might include removing Future Fund employees from coverage by the Public Service Act.

‘‘Such an employment framework would aim to reinforce the independence of the board, but still provide values and standards for the agency, particularly with respect to its responsibilities relating to public money,’’ Mr Tanner said in a speech to the National Press Club.

‘‘The government’s decision to examine these options reflects a greater understanding of the nature of the Future Fund,’’ he said, likening the Fund as a public authority to the Reserve Bank of Australia.

‘‘Being primarily responsible for investment management, the agency operates within financial markets in a largely commercial environment,’’ Mr Tanner said. ‘‘Removing the fund from the Public Service Act would enhance its independence from government and make it easier to recruit specialised fund managers.’’

The Future Fund, whose board of guardians is headed by former Commonwealth Bank chief executive David Murray, is Telstra’s largest single shareholder.

In August, the fund sold $2.37 billion worth of its original holding of 17 per cent, ahead of the government’s announcement of reforms to the telecommunications industry, in preparation for the construction of a national broadband network.

A key part of the national broadband network legislation revolves around Telstra, which faces the structural separation of its wholesale and retail businesses, either voluntarily or forcibly.

The prospect has angered smaller Telstra investors, who are concerned about the impact on the value of their shareholdings.

Mr Tanner said the fund had had no prior knowledge of the government’s plans when it sold down its holding in Telstra.

He stressed that the government’s negotiations with Telstra about structural separation meant that the fund’s activities ‘‘must be absolutely independent’’.

‘‘With this is in mind, today I want to make it absolutely clear that the government will not be directing the board in relation to its Telstra shareholdings as is allowed under the Future Fund Act, including the exercising of its voting rights in relation to any shareholder vote on structural separation,’’ he said. ‘‘Nor will the government discuss with the board its intentions in relation to the use of its voting rights.

‘‘The Future Fund will make its decisions with only one issue in mind: shareholder value.’’

Mr Tanner also announced on Wednesday that Australia would host in May 2010 the second meeting of the International Forum of Sovereign Wealth Funds, which is chaired by Mr Murray.

AAP