Why Joe Hockey should think before he speaks

Twice in two days, Joe Hockey has made some weird and wonderful comments. First, his comments to Bill Shorten about the Opposition’s ‘questionable’ support of the ISIL defence efforts:

‘…if Bill Shorten truly is honest about his commitment to deliver bipartisan support in relation to our defence efforts in the Middle East, he will provide bipartisan support to pay for it…’

And now this, regarding ANU’s decision to diminish resources industry investment from their portfolio:

‘…I would suggest they’re removed from the reality of what is helping to drive the Australian economy and create more employment…Sometimes the view looks different from the lofty rooms of a university…’

 

Oooh look at those nails…Kitty can SCRATCH!!!

On the 3rd of October, ANU announced its new Social Responsibility Investment policy, which took a strong stance against fossil fuel and resource sector investments. This new policy will see the University divest its shares in Iluka Resources, Independence Group, Newcrest Mining, Sandfire Resources, Oil Search, Santos and Sirius Resources.

From the ANU Financial Position webpage we can read the following about the focus of ANU’s portfolio:

Annual University revenue is $0.9B, while funds in investments total $1.1B. This investment portfolio serves a number of purposes:

  • Provides revenue to support the ANU liability to current and former staff covered by the Commonwealth Superannuation Scheme (CSS) – approx. $450M.
  • Invests the funds within the Endowment for Excellence which funds some staff salaries, scholarships etc.
  • Invests the cash reserves of the University, whether held centrally or by Colleges.

Given the state of the resources sector in the last 12 months, it seems logical for the university to seek new growth investments in other industries. The divestment represents only 1% of ANU’s $1.1billion portfolio, so the economic impact of this change on the seven mining companies would not necessarily be a game changer.

It is rather interesting to see a member – the first one – of the Federal Cabinet, to speak out publicly about the investment decisions of an education institution. Although the Australian National University is a public university, one of the Group of Eight Universities, and receives funding predominantly from federal government and the Commonwealth, it ultimately has full control over its resources and investment decisions.

What is surprising about Hockey is that he made no comment in August when his own University of Sydney (where he graduated with a double Bachelors in Law/Arts) halted its investments in coal producers, namely Whitehaven. UniSyd’s porfolio of $1 billion is of similar size to ANU’s and when it announced its policy change its spokeswoman even went so far as to say ‘…The university has issued an instruction to its Australian equities managers to make no further investments in the coal and consumable fuels subsector of the ASX…’. Not a peep from Hockey, in response to these comments, which could be considered an attack on the resources industry as a whole.

Perhaps it is the proximity of the ANU to Hockey’s offices in Federal Parliament, or some nepotism towards his old almer mater, but Hockey’s bandwagon comments seem motivated by relationships with resources companies, rather than a concern for the sustainability and longevity of the Australian economy. It is unrealistic and irresponsible for the Federal Treasurer to make erroneous statements about the effect of social investment and the ‘economic dangers’ clean energy, when he has not worked with the Cabinet to form energy policy otherwise.

Sustaining People looks forward to more entertaining notable quotables from our Treasurer in the future.