Heat on Labor over tobacco investments
THE Gillard government is facing pressure to stop its multibillion-dollar Future Fund from investing in the tobacco industry and in companies that make nuclear weapons.
THE Gillard government is facing pressure to stop its multibillion-dollar Future Fund from investing in the tobacco industry and in companies that make nuclear weapons.The Future Fund, which was set up by the former Howard government to help meet the long-term cost of public sector superannuation liabilities, revealed last year that it held $147 million worth of shares in cigarette producers.The Greens, on whom the government depends to pass legislation in the Senate, plan to increase pressure for the fund to ditch the big tobacco stake and a separate $179 million holding of shares in companies involved in nuclear weapons production.When the Senate resumes sitting next month after the summer break, the Greens will push for rules forcing the fund to divest its "unethical" holdings.Greens Senator Richard Di Natale, who introduced a bill on the subject late last year, said it was a "no brainer" for the Future Fund to offload its tobacco and nuclear holdings.Senator Di Natale said it was completely inconsistent for the government to fight big tobacco with "courageous" plain packaging laws, and "then on the other hand to be investing $147 million in large multinationals who make the stuff".The plain-packaging laws were passed late last year, and Philip Morris has already lodged a legal claim saying the restrictions damaged its property.While the government has refused to tell the fund what to invest in, Senator Di Natale said selling the shares would have little effect on the $73 billion fund's returns."It would be very easy to divest ourselves of those shares without any impact on the bottom line, and I think it would be the socially responsible thing for the government to do."Previously, the fund has defended its investments in the companies on the grounds that they are not involved in illegal activities. The government has refused to intervene in its independent investment decisions.However, there are overseas precedents for governments intervening in how public funds are invested. In October, the Canadian state of Alberta sold $US17.5 million worth of tobacco shares because it was suing tobacco firms for healthcare costs caused by smoking.Norway's sovereign wealth fund sold its investments in tobacco in 2010, and has guidelines preventing investing in companies that damage the environment.The Future Fund last year sold its holdings in companies that make cluster bombs and land mines including defence giant Lockheed Martin before a new treaty on the bombs came into force.When Future Fund general manager Mark Burgess was questioned about the tobacco and nuclear investments in October, he said it was updating its environmental, social and governance strategy.It is understood some government MPs are sympathetic to the Greens' argument, but Finance Minister Penny Wong has stressed the need for the fund to make arm's length investment decisions.The fund's record on social and environment issues was scrutinised last year when evidence emerged that its board had never discussed climate change.