Victorian government investing more than $100m despite efforts to reduce smoking.
THE Victorian government is investing more than $100 million in tobacco companies despite efforts to reduce smoking rates in the community.
The state government's investment management organisation, the Victorian Funds Management Corporation, says of its investment assets, worth $37.9 billion, that 0.3 per cent is placed in the tobacco industry.
This brings its tobacco investment to about $117 million - nearly four times the New South Wales government's allocation of $30 million.
The VFMC manages investments for public sector organisations including insurers and superannuation funds. Clients include the Department of Health, the Transport Accident Commission, Victorian Managed Insurance Authority, WorkSafe, the Royal Children's Hospital and the University of Melbourne.
The head of client services for the corporation, Malcolm Ashbolt, said although it had decided to stop investing in cluster munitions in recent years, it had no intention of divesting in tobacco companies, which were chosen by external investment managers, not the VFMC.
He said the group's main objective was to provide funds management services to the state in a "commercially effective, efficient and competitive manner".
Doctors and health groups said the investment was outrageous and hypocritical when governments were trying to reduce the damage tobacco caused to people's health.
The executive director of Quit Victoria, Fiona Sharkie, called for the government to abandon its investment because it undermined Australia's tobacco control measures including plain packaging.
"It's really in conflict with the governments' health objectives. Tobacco has been on the health agenda for the federal and state governments for years, so on the one hand they're saying we're investing in tobacco control but on the other hand they're saying we're investing in the companies," she said.
The chief executive of Action on Smoking and Health Australia, Anne Jones, said if the VFMC abandoned investments in cluster munitions, it should pull its money out of tobacco companies.
"Cluster bombs injure and kill about 17,000 people a year and tobacco kills just under 6 million people a year worldwide," she said.
Ms Jones said deaths caused by tobacco were predicted to reach 10 million by 2025, with most of the deaths in poor and middle-income earning countries.
"It's outrageous. These are countries we are sending AusAID to to reduce tobacco diseases," she said.
Dr Bronwyn King, a radiation oncologist at Peter MacCallum Cancer Centre who successfully lobbied a superannuation company to drop its investments in tobacco this year, also called for the Victorian government to follow suit. "As a cancer doctor, every single day I see the devastating effects tobacco has on individuals and their families," she said.
While the NSW government committed to reviewing its investment in tobacco companies this week, a spokeswoman for Victorian Treasurer Kim Wells would not comment on the matter except to say the VFMC was required to invest in accordance with its commercial objectives.
"Under legislation, the Treasurer cannot direct the VFMC in relation to an investment decision," she said.
Frequently Asked Questions about this Article…
How much is the Victorian government investing in tobacco companies?
The Victorian Funds Management Corporation (VFMC) says about 0.3% of its $37.9 billion in investment assets is placed in the tobacco industry — roughly $117 million. For comparison, the New South Wales government’s allocation was reported at about $30 million.
Who manages the Victorian government’s investments in tobacco companies?
The VFMC manages investments on behalf of public sector organisations, but the article says tobacco holdings were chosen by external investment managers rather than the VFMC itself. VFMC clients include bodies such as the Department of Health, the Transport Accident Commission, Victorian Managed Insurance Authority, WorkSafe, the Royal Children’s Hospital and the University of Melbourne.
Why are doctors and health groups critical of government investment in tobacco?
Health groups and medical professionals called the investment hypocritical because it appears to conflict with government tobacco control measures. Commentators in the article said investing in tobacco undermines public health initiatives such as plain packaging and noted tobacco’s large global health toll, which some speakers said is currently just under 6 million deaths a year and could reach 10 million by 2025.
Has the VFMC taken ethical investment decisions before, like divesting from controversial industries?
Yes. The VFMC previously decided to stop investing in cluster munitions in recent years, according to the article. However, VFMC has said it has no intention of divesting from tobacco companies at this time.
Can the Victorian Treasurer force the VFMC to sell its tobacco holdings?
No. A spokeswoman for the Victorian Treasurer said under current legislation the Treasurer cannot direct the VFMC in relation to an investment decision, so the Treasurer cannot force a divestment.
Have other governments or organisations responded to the issue of tobacco investments?
Yes. The article notes the New South Wales government committed to reviewing its investment in tobacco companies. It also describes how a superannuation company was successfully lobbied this year to drop tobacco investments, demonstrating other organisations have taken action.
What reasons does the VFMC give for keeping tobacco investments?
VFMC’s head of client services, Malcolm Ashbolt, said the corporation’s main objective is to provide funds management services to the state in a commercially effective, efficient and competitive manner. He also emphasised that tobacco holdings were selected by external investment managers, not by the VFMC itself.
What are health advocacy groups asking the Victorian government to do about its tobacco investments?
Groups quoted in the article, including Quit Victoria and Action on Smoking and Health Australia, called for the government to abandon its tobacco investments. They argue divestment would align government investment policy with public health objectives and past decisions such as the VFMC’s move away from cluster munitions.
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