Australia’s Sovereign Wealth Fund Should Not Be Funnelled Into Net Zero, Says Think Tank

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The call comes after the Australian treasurer appointed former union secretary Greg Combet to lead the $200 billion sovereign wealth fund.

The Future Fund—Australia’s sovereign wealth fund—must remain in its current independently-managed form, as opposed to liquidated to fuel more government spending on net zero, according to the free market think tank, the Centre for Independent Studies (CIS). 

On Jan. 30, the CIS released a publication written by David Murray— one of The Future Fund’s inaugural chairmen—in which Mr. Murray argues that the fund should be protected from being sold by politicians looking to fund their “pet projects.” 

“What is disappointing is the emergence of political freeloaders wanting pet projects and more net debt on the back of the …  fund which has turned out to be an Australian institutional asset highly regarded around the world,” Mr. Murray wrote. 

“We need to rein in public outlays and bloating of the public sector, reduce federal and state indebtedness, get inflation back to the target range, and most important of all, increase productivity.”

Mr. Murray also said the fund’s liquidation would allow for the further expansion of big government through larger amounts of public debt and spending. 

“The better question is whether the government would implement measures to reduce state debt, curb inflation, and decrease the size of the public sector if it received an injection of funds from the liquidation of Future Fund.”

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“It seems highly unlikely, given the government’s recent actions to create more indebted investment vehicles, promote energy sector projects and subsidies, talk up projects like the Melbourne/Brisbane fast train, and do nothing to address declining productivity.”

Future Fund’s New Appointment

Mr. Murray’s CIS article comes in the wake of the recent appointment of Greg Combet as chair of Future Fund as a replacement for former Deputy Prime Minister Peter Costello. 

Mr. Combet spent time as a federal Labor MP and minister for climate change and energy. Prior to this, he worked as a trade unionist at the Australian Council of Trade Unions (ACTU) where he served as secretary. 

A staunch advocate for Australia’s transition to net zero emissions by 2050, Mr. Combet also currently serves as chair of the Australian Government Net Zero Economic Agency (NZEA)—a body that oversees the national transition from fossil fuels to renewable energy. 

Mr. Combet has also spent considerable time as a company director of super funds Industry Super Australia and IFM Investors, where he became known for instituting investment philosophies consistent with an Environmental, Social, and Corporate Governance (ESG) mandate. 

In Sept. 2023, Mr. Combet made an address to the Australian Emissions Reduction Summit in which he outlined his vision to deploy more of Australians’ superannuation savings to invest in decarbonisation and renewable energy schemes. 

“One of the things in my mind is to be thinking about how we can open up investment opportunities for commensurate risk-adjusted returns for institutional investors—amongst super funds in Australia as well—to be in the energy transition in a more significant way, to be in the decarbonisation process by taking stakes in companies,” Mr. Combet said in his address

Treasurer Jim Chalmers, who announced Mr. Combet’s Future Fund appointment, has also advocated for Australia’s $3.5 trillion super sector to play a greater role in decarbonising the economy. 

In Nov. 2023, Mr. Chalmers introduced the Superannuation (Objective) Bill to parliament. 

The bill proposes defining the objective of superannuation as follows: “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”

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