Last week, the sovereign wealth fund came under fire after it was revealed it recently boosted its stakes in domestic fossil fuel giants, including Woodside Energy, Santos, and Whitehaven Coal.
Namely, new research by Market Forces found that the Future Fund now has more than $1 billion invested in the three companies, having increased its stake in all three of “Australia’s worst climate wreckers” in the six months to 30 June.
Just days later, asked at a media conference in Canberra whether there will be any changes regarding the fund’s investment mandate to take into account net zero or ESG, Treasurer Jim Chalmers said discussions are taking place.
“We are in discussions with the Future Fund about what the future of the Future Fund looks like, as you would expect,” Chalmers said on Monday.
“It is a very different beast in 2024 than it was when it was set up by Peter Costello. Any responsible government looks at what the Future Fund will look like in the 2030s and what it will look like in the 2040s.
“We’ve had some discussions about that.”
Noting that these discussions aren’t “concluded or finalised in any sense”, Chalmers said he has personally engaged in “a heap of conversations with Greg Combet and others about what, if anything, we should be doing to make sure that the Future Fund continues to be a really important institution in the future for this country”.
Responding to allegations made by Market Forces last week, a spokesperson for the Future Fund told InvestorDaily on Thursday: “Like other large Australian investors, we invest across the economy in line with the ASX 200 index, including in companies in the traditional energy sector.
“Through our infrastructure program, we are also one of the largest investors in renewable energy in Australia. Good governance and climate risk management are important parts of our investment program.
“Our votes against Woodside’s Climate Transition Plan and Whitehaven’s recent remuneration reports are on the public record and reflect our robust and thoughtful approach.
“Alongside our voting activity is the extensive engagement we undertake with ASX companies with climate one of the top themes raised with companies through the last financial year.”
Future Fund enjoys government’s full support
Treasurer Chalmers also reiterated on Monday that the sovereign wealth fund enjoys the government’s full support.
“We are big supporters and big believers in the Future Fund. From time to time we get advice that we should liquidate the Future Fund or something like that, and we won’t be doing that,” Chalmers said.
“We think that the Future Fund is one of those institutions that Australia has going for us, and so we’re very interested in maintaining the strongest version of the Future Fund that we can.”
Last year, the government faced increased pressure to liquidate the Future Fund to plug projected government debt.
Namely, back in 2023, The Centre for Independent Studies has called for the fund to be liquidated for fiscal purposes, while former labor minister Craig Emerson suggested that part of the liquidated proceeds be put towards renewable energy and public housing.
Peter Costello, the fund’s former chairman, argued at the time that any such suggestions were “foolhardy”, highlighting concerns that as the government’s financial position declines, there will be more plans to spend it.
“Once it is spent, there is no significant asset on the government’s balance sheet. Once it is spent, there is nothing to offset the growing liabilities of debt, of unfunded pensions and unfunded military injury claims,” he said in November last year.
“Once it is gone, the pressure to raise taxes and borrow debt will accelerate.”
Costello’s 14 years on the Future Fund board of guardians, including a decade as chairman, came to an end in February. He was replaced by Greg Combet earlier this year – a former minister for climate change, industry and innovation in the second Gillard administration, and chair of the Net Zero Economy Agency since July 2023.
