Page 2367 - Week 08 - Wednesday, 29 August 2007
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pressure on international equity markets, including Australia’s. This is despite the fact that most of the Australian companies whose share prices have fallen in recent weeks are not heavily leveraged, are recording significant profits and are not significantly exposed to the US economy, let alone the high risk end of the US housing market. Such is the rationality of the market.
While capital markets are good at concentrating capital for investment purposes and applying some degree of competitive rigour to investment decisions by companies, they are also bad at providing longer term security for society at large or fostering any sense of social or environmental responsibility beyond that prescribed and enforced by national regulators.
The ACT government largely eschews direct investment and relies on capital market investments to safeguard and enhance the superannuation entitlements of ACT public servants. Nicholas Stern’s report on the economics of global warming warned that climate change is the biggest example of market failure in human history. The extent of that failure is yet to be revealed. On Tuesday, Minister Barr said that climate change would present us with the greatest moral and economic challenge of our time. Business as usual, illuminated by a few low energy light globes, is not an adequate response to this critical issue. What it requires is leadership and a willingness to move ahead of the pack in seeking out solutions.
This budget, in my opinion, does very little to change the direction in which our society is moving, and any marginal salutary effect it may have is likely to be swamped by the damaging effects of some of our superannuation portfolio investments. I am very sorry that the Chief Minister felt personally offended by my comments regarding the responsibilities of his ministerial portfolio. I am very gladdened by the obvious priority that he has placed on the review of ethical investment practices. But if he does not keep MLAs in the loop regarding reviews that their concern has instigated, what can he expect us to think and say? It is my job to ask questions, and if we are told what is going on we do not need to ask them.
These are serious matters and I suppose I could feel insulted by the Chief Minister suggesting that I am playing politics with these issues. There are good ways to send signals to the market that some corporate behaviour is not acceptable to the people of the ACT, and I expect they would like their government to do that for them. In fact, it was quite obvious that Mr Stanhope did not know where most of the investments went until the Canberra Times produced that list. He was as surprised as anyone, perhaps, to find out that the ACT is investing in companies that produce munitions. That does not mean that I feel that he is responsible for producing cluster bombs, by any means. He did not even know that some of our investments went that way.
Investing in heavily polluting coal and uranium industries instead of investing in renewable energy companies because they have not yet made it into the blue chip or established investment indexes is another way of ensuring that the good intentions that you might hold personally are not translated into results on the ground. I know that Mr Stanhope himself said he did not feel comfortable about supporting tobacco companies when so much of the health budget goes into stopping young people from taking up smoking.
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