One year ago, Treasurer Jim Chalmers and Finance Minister Katy Gallagher declared that the Future Fund, which is one-third the size of the Australian economy, would be directed to invest in housing and the green energy transition “where possible, appropriate, and consistent with strong returns”.
This was the first time the federal government imposed certain asset classes for the Future Fund, established in 2006 by then-Liberal Treasurer Peter Costello to support the pensions of federal employees.
The move reinforced Chalmers’ belief in “values-based capitalism”, which directs both public and private resources towards social goals. It also accords with the Future Fund’s new chair, former Labor Minister Greg Combet, who wants to increase investment in renewable energy.
In November 2024, the Albanese government passed legislation that defined the objective of superannuation as “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
Paul Schroder, the head of the nation’s largest fund, AustralianSuper, described the government’s intervention into superannuation investments as an “utter disaster”.
“There is nothing worse than the prospect of government intervening in investment decision-making. Nothing worse”, Schroder said.
“In the Australian system, individual members carry the investment risk. You can’t then impose decisions about investments on them”.
Schroder argued that super funds “must” act in their members’ “best financial interest” to ensure the highest returns on their investments.
“It would be a disaster if a government of any persuasion, of any political colour, became involved in investment decision-making. An utter disaster”, he said.
The Australian reported that Chalmers also wants to direct Australia’s superannuation savings into Labor’s pet policy areas, such as renewable energy.
“Jim Chalmers is accelerating government plans to unlock billions of dollars from Australia’s $4.3 trillion superannuation system to underwrite Labor’s policy priorities through an overhaul of rules that will remove “unnecessary obstacles to investment””, The Australian’s Geoff Chambers wrote.
“Dr Chalmers confirmed he was pushing ahead with superannuation performance test changes to ensure the nation’s retirement savings were available to invest in key areas including housing and clean energy”.
Alarmingly, the Association of Superannuation Funds of Australia (ASFA) also wants the performance test watered down to facilitate investments in renewable energy.
In ASFA’s view, “One of the most profound opportunities lies in Australia’s energy transition—this is a chance to reshape our productive economy … This investment will not only decarbonise our infrastructure—it will modernise it, making our economy more efficient, resilient and innovative”.
However, as Judith Sloan from The Australian pointed out, Sweden’s pension fund has lost billions after investing in failed renewable energy projects at the behest of the government.
Indeed, Sweden’s pension industry has suffered losses of around SEK 197 billion (≈ €18.5 billion/USD $20 billion) from investments in large-scale renewable and “green industrial” projects, largely tied to renewable energy and net‑zero industrial ventures.
The main losses include:
- Northvolt (battery manufacturing): Once hailed as Europe’s EV battery champion, but faced severe financial distress and bankruptcy filings.
- Green steel ventures (e.g., Stegra/Hybrit projects): Struggled with funding shortages and escalating costs.
- Other start‑ups in Sweden’s far north, part of the government’s “green industrial revolution”, also failed to deliver expected returns.
Sweden’s government encouraged pension funds to back its “green industrial revolution”. As a result, Swedish pension funds shifted heavily into climate‑aligned industrial projects rather than diversified financial assets. These renewable mega‑projects then faced cost overruns, technological hurdles, and slower‑than‑expected demand.
Sweden’s large state‑run “buffer funds” (e.g., Andra AP‑fonden/AP2) and occupational insurers like AMF Pension were most heavily invested in these projects.
There are clear lessons here for Australia. Sweden’s pension implosion is a cautionary tale about concentrating retirement savings in high‑risk industrial decarbonisation projects.
Australia’s superannuation funds should act in the best financial interests of members and aim to achieve the highest possible investment returns. Our superannuation savings must not be used as a slush fund to satisfy political agendas or social justice concerns.
Superannuation savings belong to Australian members, not the government. Maximising financial returns for a dignified retirement should be the only mandate.
It is bad enough for the federal government to waste billions of taxpayer dollars on boondoggle energy projects. But directing Australia’s superannuation savings into doing so with minimal transparency and accountability is even worse.
Hands off our super, Jim Chalmers.
