The Australian Chamber of Commerce and Industry (ACCI) says directing the Future Fund to invest in political priorities rather than allowing it to continue with merit-based investing will diminish confidence in the independence of Australia’s financial institutions and reduce investment in higher performing sectors and asset classes.

Australia’s largest and most representative business network believes the key to the success of sovereign wealth funds such as the Future Fund is ensuring that fund managers are able to invest based on commercial merit rather than being directed to serve politically inspired goals.

ACCI chief executive officer Andrew McKellar said there is an important investment principle at stake.

“A fund manager allowed to invest in any assets will achieve higher returns than a fund manager limited to investing in a narrower subset of assets,” said Mr McKellar

“The notion that fund managers directing investment into subset areas will enjoy the same returns as fund managers with the freedom to follow commercial merit is a logical flaw which will mean real-world losses for Australian taxpayers.”

Mr McKellar said a key problem for the Australian business community with the proposal is that investments now channelled into politically favoured sectors will come at the expense of investment in merit-based assets.

“Directing money away from Australia’s efficient companies to put in assets in politically favoured classes is bad for our high-performing companies and risks the loss of national productivity and economic efficiency,” Mr McKellar said.

The Australian Chamber of Commerce and Industry believes that the Future Fund should be investing on the basis of merit and independent strategy rather than political considerations.