In a recent speech, the Federal Treasurer hastily bundled together three things that he felt superannuation funds ought to invest in: renewable energy, defence and housing. It was a classic ‘sandwich’ communication: bracket the unpleasant item between two that sound good.
I agree that super funds investing in renewable energy makes good investment sense and my understanding is that they have already been doing so, for many years now.
With respect to housing, again they are in this space already and I don’t really see how extra dollars will address housing affordability. All it will do is pour additional liquidity into our overheated housing market and ensure that prices remain sky high. Funds aren’t going to provide housing out of charity, they rightly expect to make a profit. If we want to see a big increase in affordable housing we need a government-backed investment fund that doesn’t mind breaking even – and better still if it were to use government land, thus driving down costs even further. A good start might be to sell off the needless abundance of Naval bases around Sydney harbour (it’s not the nineteenth century anymore) and using the proceeds to buy up land elsewhere.
However, the element that most needs challenging is this proposal that workers retirement savings should be invested into defence as a reliable source of returns.
Arms are up there with tobacco and pornography among the items that have been removed from most investment vehicles. Why? It’s not simply because a large portion of investors disapprove of them ethically (which they do); it’s because encouraging the growth of those businesses is to encourage social degeneration.
Public money, that is money raised through taxes, gets spent on defence as a cost centre. We collectively shell out all this money, reluctantly one would hope, to pay for our standing professional army and for its equipment accepting that this is, if you’ll excuse the expression, a sunk cost.
The Treasurer’s proposal is to turn this on its head and make defence into a revenue centre. The notion that super funds should redirect the public’s own private savings into defence to make a profit is frankly despicable. It creates a new dynamic where defence switches from being seen as a cost for government to becoming a means of making a buck. How does it make money? There’s only one way of course: by jumping headfirst into wars, depleting supplies so that more need to be produced. Or you can sell them to other people so they can conduct wars. Rather than seeing war as costly and wasteful in a financial sense as well as a human sense, we would instead have an economic imperative to foster and encourage it. The Ukraine Bushmaster donation would go from being exceptional to being something we’d have people pushing for constantly, fuelling and prolonging conflicts all around the globe. It’s no accident that the United States is at the one time the biggest manufacturer and exporter of defence equipment and technology and, at the same time, the nation most ready to stoke or prolong armed conflicts. Their own Tufts University counts over 200 armed conflicts that they have initiated around the world since 1945.
Is there money to be made in defence? Absolutely. Would everyday working Australians be happy knowing that their money is being used to fund conflict and death around the globe? Absolutely not.
This would be an enormously regressive step. Investors and anyone else concerned with living in a peaceful world need to push back against it vigorously.
First published in The Canberra Times January 11,2024
Michael Walker
Dr Michael Walker works in the Justice and Peace Office of the Catholic Archdiocese of Sydney. He teaches at Australian Catholic University.