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Finance and Public Administration Legislation Committee
29/10/2012
Estimates
FINANCE AND DEREGULATION PORTFOLIO
Future Fund Management Agency

Future Fund Management Agency

Committee met at 17:36

CHAIR ( Senator Polley ): I declare open this meeting of the Senate Finance and Public Administration Legislation Committee. The Senate has referred to the committee the particulars of proposed expenditure for 2012-13 for the parliamentary departments and the portfolios of the Prime Minister and Cabinet, and Finance and Deregulation. The committee may also examine the annual reports of the departments and agencies appearing before it. The hearing today is supplementary to the budget estimates hearings held in May. The committee has fixed Friday, 30 November 2012 as the day by which answers to questions on notice are to be returned.

This evening the committee will continue examination of the Future Fund Management Agency, which commenced at its hearing on 16 October 2012. Under standing order 26, the committee must take all evidence in public session. This includes answers to questions on notice. Officers and senators are familiar with the rules of the Senate governing estimates hearings. If you need assistance, the secretary has copies of the rules. I particularly draw the attention of witnesses to an order of the Senate of 13 May 2009 specifying the process by which a claim of public interest immunity should be raised, which I now incorporate into Hansard.

The extract read as follows—

Public interest immunity claims

That the Senate—

(a) notes that ministers and officers have continued to refuse to provide information to Senate committees without properly raising claims of public interest immunity as required by past resolutions of the Senate;

(b) reaffirms the principles of past resolutions of the Senate by this order, to provide ministers and officers with guidance as to the proper process for raising public interest immunity claims and to consolidate those past resolutions of the Senate;

(c) orders that the following operate as an order of continuing effect:

(1) If:

(a) a Senate committee, or a senator in the course of proceedings of a committee, requests information or a document from a Commonwealth department or agency; and

(b) an officer of the department or agency to whom the request is directed believes that it may not be in the public interest to disclose the information or document to the committee, the officer shall state to the committee the ground on which the officer believes that it may not be in the public interest to disclose the information or document to the committee, and specify the harm to the public interest that could result from the disclosure of the information or document.

(2) If, after receiving the officer’s statement under paragraph (1), the committee or the senator requests the officer to refer the question of the disclosure of the information or document to a responsible minister, the officer shall refer that question to the minister.

(3) If a minister, on a reference by an officer under paragraph (2), concludes that it would not be in the public interest to disclose the information or document to the committee, the minister shall provide to the committee a statement of the ground for that conclusion, specifying the harm to the public interest that could result from the disclosure of the information or document.

(4) A minister, in a statement under paragraph (3), shall indicate whether the harm to the public interest that could result from the disclosure of the information or document to the committee could result only from the publication of the information or document by the committee, or could result, equally or in part, from the disclosure of the information or document to the committee as in camera evidence.

(5) If, after considering a statement by a minister provided under paragraph (3), the committee concludes that the statement does not sufficiently justify the withholding of the information or document from the committee, the committee shall report the matter to the Senate.

(6) A decision by a committee not to report a matter to the Senate under paragraph (5) does not prevent a senator from raising the matter in the Senate in accordance with other procedures of the Senate.

(7) A statement that information or a document is not published, or is confidential, or consists of advice to, or internal deliberations of, government, in the absence of specification of the harm to the public interest that could result from the disclosure of the information or document, is not a statement that meets the requirements of paragraph (1) or (4).

(8) If a minister concludes that a statement under paragraph (3) should more appropriately be made by the head of an agency, by reason of the independence of that agency from ministerial direction or control, the minister shall inform the committee of that conclusion and the reason for that conclusion, and shall refer the matter to the head of the agency, who shall then be required to provide a statement in accordance with paragraph (3).

(Extract, Senate Standing Orders, pp 124-125)

CHAIR: I would like to also request that, if senators wish to table any documents or provide additional information during the proceedings, they please bring a duplicate copy so that copies can be made as quickly as possible for other members of the committee. I welcome the Minister for Finance and Deregulation, Senator the Hon. Penny Wong; Mr David Gonski, chairman of the Future Fund Board of Guardians; and Mr Mark Burgess, managing director of the Future Fund Management Agency. I would like to welcome officers of the Department of Finance and Deregulation. Minister, do you have an opening statement?

Senator Wong: No, thank you, Chair.

CHAIR: Mr Gonski, welcome to the hearing. Do you have an opening statement?

Mr Gonski : No, I do not. Thank you.

CHAIR: Thank you.

Senator CORMANN: Mr Gonski, welcome. Thank you on behalf of the coalition for making yourself available for this additional hearing of our Senate estimates. I have some questions around two areas: one in relation to corporate governance, which we have touched on during the main hearing, and also a question in relation to any discussions about future use of Future Fund income. I might just kick off with some questions around corporate governance. As the chair and CEO of the Future Fund under the act, as you would of course be aware, one of your responsibilities is the appropriate management of conflicts of interest. Can you talk us through the protocols and procedures that you have in place or that you may have put in place since you became the chair and CEO to ensure that there is no perception of or actual conflicts of interest at the Future Fund from a board and management perspective.

Mr Gonski : I thank you firstly for the question. I should say that I think I have spent my life—my 35 years as a business person—being very much involved in governance and very much involved in working out how conflicts and so on should be handled. If I have an expertise, I think it is in that. In terms of what I have done since I became chairman, I have established a conflicts committee. That conflicts committee is available, should we have conflicts. I have also got that conflicts committee to look at a number of items, including the use of offices and other space that we may use outside of the headquarters of the Future Fund, which of course are in Melbourne. They have prepared a policy and the conflicts committee, I must say, is working well.

I can assure the senator that we are very careful on conflicts. We have a section in every meeting where people should and do declare any conflicts that they have. If they do have a conflict, they remove themselves from the meeting at the appropriate time. I am very aware that my members—the other custodians or guardians—are very attuned to conflicts and you may be assured that during my time they will be very well policed, as, I might say, they were by my predecessor.

Senator CORMANN: Thank you, Mr Gonski. Like your predecessor, you are Sydney based while the Future Fund Management Agency is principally Melbourne based or headquartered. Unlike your predecessor, you have made the decision to operate from your private offices at Investec instead of using a separate, dedicated Sydney office as your predecessor did. Can you talk us through any protocols and procedures you have put in place specifically to deal with and manage any perception of conflicts of interest, given that you operate from your private offices?

Mr Gonski : Let me firstly describe my office. I have a lockable and indeed quite separate office. The only people who are able to see what I am doing are me and my assistant. She is my assistant alone and works with me and for me. In terms of meeting rooms, they are all front of house. They are not involved in the workings of the bank that lies a few floors below them and they are very, very well secured so that those who come in can go to the meeting rooms directly and those who are working there can do so without others seeing or being involved.

I should add that I felt the offices in Sydney, perhaps because I am a little stingy, were not required and quite expensive because of the situation I had. My predecessor did not have the ability I have because of his other positions and it was quite appropriate for him to do that. I believe it is quite appropriate for me to save that money for the fund.

Senator CORMANN: Do you keep a record of meetings you conduct? Does the Future Fund keep records of meetings that you conduct on Future Fund business in Sydney? Is a formal record kept?

Mr Gonski : Let me help a bit on that. There are three types of meetings that I have. The first type is where I meet with either other guardians or indeed my CEO, who is sitting here—my managing director—or people who work for the Future Fund. The second type of meeting is with consultants to the Future Fund—for example, our auditor or somebody advising us on a particular aspect. The third is generally ceremonial. It is not often at all—in fact I have not had it at all—that I as chairman negotiate any sort of deal from my office, because our centre of operations is in Melbourne, where we have 80-plus people who are very well adept at doing these things.

I only mention those three categories so you know that it really is not appropriate nor is it done for there to be a list of what happens in terms of each of those meetings. For the third category, which is the ceremonial one, I always ring the managing director, or maybe someone else at the Future Fund if he is not available, to tell them it is happening, to give them the opportunity either to tell me that something has to be dealt with there or to actually come. To that extent, there would be a record. With the other two categories, you would appreciate that is just working with the Future Fund and is an extension, if you like, of telephone calls and so on.

Senator CORMANN: In relation to the board as a whole and senior management, how do you manage and clear conflicts over potential future transactions by the fund?

Mr Gonski : We have a very definite and well-set-out procedure. Firstly, there are potential conflicts in relation to companies that we may be investing in. The fund keeps a list of those companies, which it provides every meeting and between meetings as well. It is accepted as an absolute rule that we do not in any way deal with shares that are on that list—or rather, companies that are on that list—et cetera.

In terms of matters of discussion and how things are actually handled, as I mentioned, when we have our meeting we have declarations of conflicts at the beginning and we give the procedure for what is going to happen in advance, particularly where we believe there may be a conflict, to allow those who may have a conflict to register it.

Senator CORMANN: So no director, no senior manager, is supposed to deal in any securities that are on this list of potential future transactions?

Mr Gonski : Most definitely.

Senator CORMANN: That information is provided as part of your board papers in between meetings?

Mr Gonski : Correct.

Senator CORMANN: How is that information handled? That is something I am interested in across the board. It is a hot list, I would have thought—a very market sensitive list. It is a list of companies that the Future Fund will potentially get involved with. How does the board, how do you as chairman and CEO, satisfy yourselves that that information is handled securely as it is transmitted to your respective directors as part of your normal processes?

Mr Gonski : Let me start by saying that it is an interesting list, but it does not mean a lot on its own. We make sure that companies are put on that list whether we have bought, are buying or are considering buying. So just looking at the list would not tell you a great deal, except our rule that you do not get involved in it. It is not going to tell you whether that is helpful, that the price will go up or down, or whatever. In terms of how it is disseminated, we disseminate in confidential ways, just as any other organisation does. Everybody receives it by email addressed to them personally, not to their assistants et cetera. I believe it is a very good system. Obviously, being from banking, I know how these things work and I think the Future Fund has set up a very good one.

Senator CORMANN: So the expectation would be that only the relevant director or senior manager would have access to that list—that it would not go to other parties outside the Future Fund under any circumstances?

Mr Gonski : That is correct.

Senator CORMANN: Have you ever had any discussions with anyone—that is, with the government or anybody else—about the possibility of a change to the purpose for which Future Fund earnings could be used? Specifically, have you ever discussed with anyone the possibility of funding education reform recommendations included in your report to the government, which is colloquially referred to as the Gonski report, from Future Fund earnings instead of using those earnings to pay for future Commonwealth Public Service superannuation liabilities?

Mr Gonski : I have never had such discussions.

Senator CORMANN: Thank you, Mr Gonski.

CHAIR: Senator Di Natale.

Senator DI NATALE: Thanks very much for the opportunity to ask you questions, Mr Gonski. Firstly, I sincerely congratulate you on your appointment as Chairman of the Future Fund. You have made an enormous contribution to public life here in Australia on issues such as education, philanthropy and so on. I think they are a testament to you, and you have done some great work in many areas. So, once again, congratulations.

It will not be a surprise that many of the questions I will be asking you today relate to the Future Fund's investment in tobacco. I was pleased and a little surprised to read on 25 and 26 October that Mr Burgess, the managing director of the Future Fund, announced that the governance committee was considering investment in cigarette manufacturers after a request from the board. I just wanted to learn a little more about how that came about and, in fact, a little more about the governance committee. Do I take that to mean the ESG committee? Would that be correct?

Mr Gonski : Senator, when I became chairman, coming from a world more involved with committees, I decided it was appropriate that we should have a network of committees that were focused on what they were set up for and could assist the board in coming to our conclusions. Each of these committees is drawn from board members, or guardians if you prefer to call them that. One of the committees we established was the governance committee. The governance committee was to look at matters such as the ones you are referring to. It will be an active committee and its realm, its charter, which took the first meeting to establish, includes matters such as ESG and those to which you referred.

Senator DI NATALE: I would like to ask you a little bit more about the committee. I must say it is a surprise because reading the publications, the news reports, from last week the statements from Mr Burgess indicate that the review has come up in the normal course of events. In another quote from the Australian Mr Burgess indicates:

We are always looking at the overall framework and policies that we have adopted.

He then goes on to outline the investment in companies that manufactured cluster bombs and divestment in that area. But what you are indicating to me is that this is a new subcommittee and, in fact, this is not the normal course of events. Is that correct?

Mr Gonski : The first part is correct. It is a new subcommittee. The second part is that it is in the normal course of events. This is exactly what we set the committee up to do and it is doing its job. Basically we refer to that committee the issues of ESG and other things. The committee has only had, from memory, three meetings. It had substantial things to do in the first one—that is, set itself up—in the second one it had other things to do and in its third one, quite appropriately, it looked at this matter in the ordinary course.

Senator DI NATALE: Great. Just a few questions about the committee. Why wasn't there one established prior to your stewardship?

Senator Wong: He can't answer that question.

Senator DI NATALE: Okay, so why did you set this one up?

Mr Gonski : As I said earlier, I am used to these sorts of frameworks. I come from a listed public company background—over the last 10 years most public companies have set up committees of the board—and I like to provide the opportunity for directors to be involved very much, and these committees are very useful for getting right to the nth degree of what is happening and advising the board accordingly.

Senator DI NATALE: So we have a governance subcommittee. I take it from previous questioning there is a conflict subcommittee.

Mr Gonski : Correct.

Senator DI NATALE: Other subcommittees?

Mr Gonski : Yes, we have an audit committee, which you would expect, which there was previously. We have a risk committee and we have a remuneration and nominations committee.

Senator DI NATALE: And they are all new?

Mr Gonski : I put this structure together with the help of our managing director, and I might say the board is very happy with it; indeed it has embraced it and is taking it further.

Senator DI NATALE: Good.

Senator Wong: Obviously, as per previous Senate evidence, the audit committee is not new.

Senator DI NATALE: Yes, I would hope so. So a little more about the governance subcommittee, which is clearly responsible for the recent announcement. Do you have terms of reference?

Mr Gonski : We have established a charter for each of the committees, and it has a charter.

Senator DI NATALE: Are you able to table the charter for each of those committees?

Mr Gonski : If I cannot, it is only because I do not have it.

Senator Wong: We will take that on notice.

Senator DI NATALE: Thank you. Clearly tobacco is one of the areas that the governance committee is looking at, it would be fair to say. You are looking at me quizzically. Is that a fair assumption?

Mr Gonski : We have announced that we have, as a board, asked the governance committee specifically to look at tobacco manufacture and the various aspects as it affects the Future Fund. I am sure it will not be its only reference over the years, but that is the reference today.

Senator DI NATALE: My next question is: have any other references been made?

Mr Gonski : Other than its usual course of dealing with things, no other reference has been made.

Senator DI NATALE: This is a standing committee?

Mr Gonski : This is the standing committee of the board of guardians.

Senator DI NATALE: How does it relate to the fund's ESG policy? Can you give me a bit of an indication? I know there is an ESG officer. We have had a discussion at previous estimates hearings. Can you tell me a little more about the relationship between the governance subcommittee and the work done by the ESG officer and your ESG framework?

Mr Gonski : Let me start by saying that the ESG policy which I inherited was a very good one, one which has been updated on a number of occasions and to which a lot of thought has been given. The ESG officer is a capable and indeed, I find, a very good person. The governance committee was established for references such as this. If there are, by determination of the governance committee, some things to do, it will take them to the board. If the board determines that, it could change an ESG policy. For that matter, if it referred to something else, it may change other things once the board makes that determination.

Senator DI NATALE: We have a situation where there has been an existing ESG framework and an existing ESG officer in place. The fund has been investing in tobacco for a number of years, since its inception. And yet it has been the establishment of the governance subcommittee and the referral to that that has triggered a change or at least a review. What does that say about the existing ESG framework, if we have not seen any change or at least review of the existing investment in tobacco?

Mr Gonski : I do not think that it is for me to talk about what has happened to date. I can assure you, and no doubt you are aware of it, that the ESG policy was a good one. All I can say to you is that, since my coming, because of the background I have in governance and so on, I have introduced a procedure, and it is a fact that, at the moment, that governance committee has had referred to it the question of tobacco manufacture and, in particular, the investment in tobacco manufacturers.

Senator DI NATALE: I suppose I have a slightly different view on the ESG framework, given that the approach has been to this point one of engagement rather than recommending exemptions. I have asked on a number of occasions about the sort of benchmark that is required to demonstrate an improvement in the activity or behaviour of a particular industry for that engagement to be of value. I have made a number of references specifically to tobacco.

I do not need—I am sure, Mr Gonski—to tell you about the wonderful record of the tobacco industry. We have the fund, for example, investing in over $50 million worth of British American Tobacco shares. They get their tobacco from Africa. We know there is a huge issue with child labour in Africa, particularly in the tobacco industry. There are young kids who are abused if they do not turn up to work on time. They are very aggressively marketed at, because of the practices of British American Tobacco. There are a number of examples. There is the Indonesian tobacco company that makes those lovely sweet cigarettes with the sweet filters that young kids love so much, and we have in Indonesia a situation where young kids start smoking from the age of three or four and most people in Indonesia who smoke took it up aged under 10.

What I fail to see through this process is: how does engagement with each of those companies that we invest in improve that sort of behaviour? I am quite happy to be proven wrong. I am quite happy to have an example of where we have had some level of engagement with those individual holdings and seen a response, but I have not seen any benchmarking done about the sort of improvement we would like to see. In fact, I have not seen one concrete example of improved behaviour within the industry.

Mr Gonski : Let me firstly say that I think I should take just one step back. You are probably aware, but forgive me for going over it, that the Future Fund does not invest specifically in particular companies. I think you are aware of that. Under our legislation, we have to invest through managers. Our investment in tobacco comes from the fact that we have invested in a number of managers, some called active managers; others passive, but each of them has a mandate. The mandate is usually something like 'investing in the 50 leaders' or 'investing in indexes' or whatever. If a particular company, be it a tobacco company, is in that mandate, then they invest in that. I just want to make it clear that that is the way the investments have been done. There has not been a specific emphasis on a particular company or whatever.

In terms of the ESG, it is a very active policy that is and has been followed by the Future Fund. Where there are matters of governance, hurt or whatever that come through, we do have and have had a situation where the fund has either voted down things or changed the way companies have done it. But, because of the relative remoteness of the investment through managers and through the fact that it is part of an index or a mandate, I just want you to know that it is not a specific investment. I want to reassure you that there is now a reference to the governance committee, and I am sure they will look at all of these things.

Senator DI NATALE: Perhaps I will talk about the specific example of divestment of cluster weapons. There is a precedent for divestment of that category of investment. In fact, when Australia signed on to the framework Convention on Cluster Munitions there was divestment. So there is a precedent for us, having done that. I am still a little confused about why we cannot use the same principles around tobacco as we have around cluster munitions.

Mr Gonski : Cluster munitions predate me, but, when I looked it up to find out why that was done, it was to be consistent with the convention that had been signed. The question of whether the investment in tobacco manufacturing is consistent with conventions now will be looked at by the governance committee. It may well be that in the past it was felt that it was consistent with that convention, but it is not for me to make judgements on the past.

Senator DI NATALE: I will point you to the World Health Organisation Framework Convention on Tobacco Control. There are very clear guidelines in that about national investments in the tobacco industry. We signed on to that framework and yet we continue to invest in tobacco, so I just point you in that direction.

Senator Wong: Are you just referring him to it, Senator? I think asking Mr Gonski for an opinion any further—

Senator DI NATALE: No, I am simply referring him to that framework that currently exists.

Senator Wong: He is duly referred.

Senator DI NATALE: Thank you. The other question I would like to ask is: has the issue of tobacco and divestment of tobacco holdings ever been referred to the board?

Mr Gonski : By whom?

Senator DI NATALE: By the ESG officer? Have concerns ever been raised at a board level?

Mr Gonski : I can only speak, I must tell you, for—

Senator DI NATALE: Perhaps I might just ask Mr Burgess that. I am sorry to cut you off.

Mr Burgess : In effect, all sectors are referred to the board on a regular basis when they look at the entire ESG policy. The point that I have made in previous appearances is that it is an active policy that is reviewed on a regular basis. These were my comments the other day that as part of that review there is a process to do it in a systematic way. It is a long-term fund; therefore, we should consider it very strategically. It has been reviewed. All industries get reviewed effectively when you look at the overall ESG policy. In effect, that industry and, as I say, all other industries are also included in those reviews. That has happened pretty regularly in my time, and I believe it has happened in the past on the same basis.

Senator DI NATALE: It seems a little curious that a new chairman and the establishment of a new governance subcommittee have resulted in action on this front, but I will take your word that it is purely coincidence.

Senator Wong: Was that a question?

Senator DI NATALE: No. I just find that statement inconsistent with the clear fact that this is a referral under the stewardship of a new chairman. I have pursued this issue at estimates on a number of occasions, and the normal course of reviews has never resulted in this course of action, so I am a little surprised that suddenly the fund has announced that it will review its holdings as part of the normal course of events.

I am interested as to why this time has been chosen if it is part of the normal course of events.

Mr Burgess : As I was saying, the ESG policy gets reviewed regularly. We announced it last week because there was interest. You have raised interest in it and we thought it was appropriate just to say that this is what we are looking at next. But the ESG gets regularly reviewed by the board and this is part of the process. As Mr Gonski said, there is a very firm framework now and the development of the subcommittee allows further debate, discussion and research around that.

Senator Wong: Obviously you may have a different view, but I think that is consistent with the evidence Mr Burgess has previously given to the committee.

Senator DI NATALE: I would like ask you for a few personal reflections about your role as chairman, if that is appropriate.

Senator Wong: He is the chairperson.

Senator DI NATALE: Chairperson, I should say. I stand corrected.

Senator Wong: You do better than some have in the past on this.

Senator DI NATALE: Yes.

Senator Wong: I only say that because that is how he in fact described himself.

Senator DI NATALE: Good. Many of my own colleagues will be very disappointed.

Senator Wong: I did not want to put you in it, for that reason. I did not want to get you in trouble.

Senator DI NATALE: Yes, well, you have by pointing it out, so thank you! Can I ask you about your view of tobacco holdings? As chairperson, do you think the fund will be able to continue with its I think impressive rate of return and still manage to successfully divest itself of tobacco?

Mr Gonski : One thing I have learnt about when you refer something to a committee is you do exactly what you have done. You do not say, 'I refer it and I want a particular result.' Nor do you say what you think or whatever. I promise you that this committee will look deeply into it. I am a member of the committee. I will put my point of view, as I am sure the others will. As we have said, and this we will adhere to, we will publicise the result of our deliberations. But I think it would be totally wrong—and I am sure you would not want me to do this—to be pre-deciding the thing or indeed showing to you my own views. I will discuss them with my colleagues in the proper and judicious way.

Senator DI NATALE: I would be quite happy for you to discuss your personal views. You are more than welcome to do so, but I accept that you may not want to.

Mr Gonski : Thank you.

Senator DI NATALE: You mentioned that the results of the deliberations will be made public. Do we have a time line for that?

Mr Gonski : We have not announced a time line, but what we have done is we have announced we are doing it. The Future Fund is an excellent organisation and when it sets its mind to things it does do them.

Senator DI NATALE: Yes, good. On the specifics of the result of the deliberations, once a decision is reached that decision will be made public and we will be made aware of it at the time the decision is reached?

Mr Gonski : When the decision is given to the board, the board obviously has to talk about it and we will publicise it—

Senator DI NATALE: At the time?

Mr Gonski : at the time. We said that last Thursday.

Senator DI NATALE: That is good to know. Do you have any sense of how long those deliberations might take?

Mr Gonski : No, I think it would be wrong for me to say that, but I did say we are hardworking people.

Senator DI NATALE: I suppose what I am asking is: are we talking weeks, months, a year?

Mr Gonski : I would definitely not like to commit the committee to that, but I am aware of what the definition of 'filibuster' is and I am not trying to do that.

Senator DI NATALE: Good. I am pleased to hear it. I have a question about the level of concern there is among members of the public on this issue. Has the board been approached by members of the community, health groups and so on about this specific issue?

Mr Gonski : The answer to that is we have received some letters. I would not say we have been inundated with letters, but we have received some letters.

Senator DI NATALE: What about any expression of continuing support for the fund to continue with its current position of investing in tobacco?

Mr Gonski : I am not aware that we have received any in that regard.

Senator DI NATALE: How do you balance that? Is public opinion part of the deliberations on an issue like this?

Mr Gonski : I think that what I would say to you is that this committee will look very deeply into it and that obviously they will look at all aspects. I also observe that generally, as you know because you have done a lot of things in your time, those who are happy with the situation do not write a lot.

Senator DI NATALE: That is fair enough. Will you be prepared to take submissions on this? Would this be part of the normal course of events for the governance subcommittee?

Mr Gonski : We are not inviting submissions, but we are very aware that we are part of Australia, and I assure you or anybody who has written to us that we have a procedure, that the letters are looked at and that we do reply to them.

Senator DI NATALE: I have not asked this at previous estimates. Is it correct that the fund management and the board are also responsible for how to invest the Health and Hospitals Fund?

Mr Gonski : That is correct.

Senator DI NATALE: Can you advise whether any of the assets in that fund—the Health and Hospitals Fund—are invested in tobacco?

Mr Gonski : I can do that. None are, because of the way that the fund is invested. From memory there are no securities whatsoever; it is a cash-security type—

Senator DI NATALE: Yes, I thought that might have been the case. I will ask the question, though I am unlikely to get an answer. Of course, the government has done many good things in the area of plain packaging.

CHAIR: Wonderful things.

Senator DI NATALE: Yes, and we have been very supportive. Do you, Mr Gonski, have any concerns about how your investment mandate may in fact undermine government policy in any area, not just tobacco?

Mr Gonski : I am not sure that I can really answer that; it is for others to look at what we do. All I can tell you is that we believe we are good citizens—as, I might say, the fund has been since it was started—and that we continue with ESG considerations and will continue to do so.

Senator DI NATALE: Your predecessor was not particularly enthused about the notion of anthropogenic climate change and what needed to be done about it. Do you have a view on climate change?

Senator Wong: That is not relevant.

Senator DI NATALE: Why not?

Senator Wong: Why is Mr Gonski's view on these issues relevant to the hearings of this committee?

Senator DI NATALE: For the same reason it was relevant when David Murray was asked.

Senator Wong: No, it was not. Mr Murray expressed his personal views. He is entitled to express those personal views as a citizen; it is not a matter for an estimates committee. Mr Gonski may well want to answer it; I do not know. I have just cut him off, but I do not think that what people's views are on particular policy areas is something that the estimates committee really is focused on.

Senator DI NATALE: I think that, as chairperson of a board—

CHAIR: Senator, I will just remind you that it is not relevant in relation to the supplementary budget estimates hearings, so I would encourage you to move on with the limited time we have available.

Senator DI NATALE: I did have some questions—

Senator Wong: I could tell you what I think about it, but I think you probably know.

CHAIR: Minister, I appreciate that. But we have limited time, so I ask you to move on and keep your questions relevant to the hearing, Senator.

Senator DI NATALE: Sure. If a decision is made, what is the process for divestment?

Mr Gonski : One of the parts of the decision will be what the process is, and that is one of the reasons that we have had to take some time to look at it. It is not simple thing—as I explained, it is not just a matter of owning shares; we have interests in funds that own the shares—and the governance committee will look at all of that. If we make a decision to divest, we will explain how long it will take and how we will go about it.

Senator DI NATALE: I might ask Mr Burgess about this, because it predates your time, Mr Gonski. The fund divested itself of cluster munitions and investment in cluster munitions, so there is clearly a precedent there. How did that happen? Can you talk me through, firstly, how the decision made and, secondly, the process for divesting itself of those holdings?

Mr Burgess : It is going to be an unsatisfactory answer, I am afraid, because that was prior to my time as well.

Senator Wong: We can probably take it on notice and provide you with some information, if you would like.

Senator DI NATALE: I imagine that many of the same challenges that might be confronted here would also be confronted with that decision.

Senator Wong: I think that is assuming a particular outcome—

Senator DI NATALE: Yes. That is why I used the word 'maybe'.

Senator Wong: which, I am sorry, I am not going to comment on. If you are very keen for some more information about the way in which the cluster munitions decision was implemented, I am sure Mr Burgess could take that on notice and provide that.

Senator DI NATALE: Sure.

Senator Wong: Is that a yes? You do want it?

Senator DI NATALE: Yes, I do. Yes, thank you. I suppose the other question is just highlighting the difference between cluster munitions, which were responsible for about 4,000 casualties in 2010, and the six million that die from tobacco related illness. Does the scale of the issue involved in any way alter the deliberations that may be occurring at the moment within the governance subcommittee?

Mr Gonski : I am not going to prejudge what the governance committee is looking at. I think it would be wrong for me to do so.

Senator DI NATALE: Okay. I am happy to end my questioning there.

CHAIR: Thank you very much for making yourselves available, Mr Gonski, Mr Burgess, Minister and officers of the department. I would like to thank Hansard, the secretary and the committee.

Committee adjourned at 18 : 16