Australia that is known for its plan to implement one of the severe anti-smoking law in the world, invested $147.7 million in shares of tobacco manufacturers, as for instance British American Tobacco (BAT) in order to pay for the politicians’ retirement.
The government’s Future Fund implemented in 2006 and aimed at covering pensions of retired politicians, lawmakers and government officials held stock of shares in 14 tobacco enterprises as of December 31, 2010.
The stockholdings in producers of tobacco and cigarette companies were acquired by Bloomberg News through an Australian Freedom of Information Act request.
Australia increased tobacco taxes by 25% last year and states it will become the first state to prohibit brand names on cigarette packaging in order to make smokers quit their habit. “It seems absurd that the government is investing its money in enterprises that do not have any prosperous future, and I think that this should be prevented. It does not have any sense when the government has started the toughest anti- smoking policy in the world,” Steve Hambleton, vice president of the Australian Medical Association declared. The Future Fund’s assets as of the end of 2010 constitute $46.4 million invested in London-based British American Tobacco, $36.5 million in New York-based Philip Morris International and $26.1 million in Lorillard.
The Future Fund investments in tobacco manufacturers constitute 0.5 % of its assets in equities. “The given Fund board’s warrant doesn’t direct it in relation to investing in special industries, but indeed establishes an evident financial profit aim,” the Melbourne-based fund declared in an interview.
This board has made clear that is going to consider investment in a large number of activities and companies, declaring that those activities are legal in Australia. The fund was launched as a legitimate authority under the Future Fund Act of 2006.
Legislation that requires plain packaging and would also ban the use of company logos, any imagery or promotional text will be adopted this year. Australia already prohibits placing displays of tobacco product in shops and all cigarette packages have graphic images of smoking related illnesses.
Last year the government raised the tobacco excise by 25% that lead to an increase in the cost of a packet of 30 cigarettes by approximately $2.20 to about $17.70. One cigarette packet currently costs even more than $20 depending on where they are purchased. Small stores and gas stations sell cigarettes on excessive prices.
The Future Fund also invests in Imperial Tobacco Group, which recently declared that it may take a lawsuit action against the government plans. “Plain packaging influences our business and makes difficult for a consumer to identify our brand,” representative of a company declared in an interview. BAT and Philip Morris are also against this move.