Future Fund feels the heat over tobacco investments

The taxpayer-owned fund, which has also invested in nuclear arms companies, revealed in May the value of its tobacco shares had swelled by more than 50 per cent between late 2010 and February.

With tobacco companies fighting to overturn Canberra's cigarette plain-packaging laws, the Greens senator Richard Di Natale has introduced a bill that would ban the fund from investing in cigarette manufacturers.

The state government-supported Quit Victoria, the Australian Council on Smoking and Health, and Action on Smoking and Health Australia have all backed the bill, alleging the investments contradict government policy goals.

The executive director of Quit Victoria, Fiona Sharkie, said there was an "incongruity between health and financial policies" that needed to be addressed.

"Quit Victoria is concerned that while Australia is expending considerable sums of money to defend plain packaging laws designed to reduce tobacco consumption, we are also investing hundreds of millions of dollars in tobacco companies who are fighting to have these laws overturned," Ms Sharkie said in a submission.

The criticism comes after the superannuation giant First State Super ditched its investments in tobacco last week after feedback from members - many of whom work in healthcare. It said the financial impacts of the decisions would be "inconsequential".

The $77 billion Future Fund was set up by the Howard government to pay for the future pension liabilities of public servants, with investment decisions to be made independent of the government.

A spokeswoman for the Finance Minister, Penny Wong, defended this arrangement and pointed to the fund's own investment guidelines.

"The Future Fund board has in place an ownership policy that includes consideration of environment and social issues, and I understand that the board is continuing to develop its approach in that regard."