THE Future Fund has bought shares in a tobacco company which commissioned a report on the economic benefits of people dying prematurely from smoking-related illnesses.
It was revealed in a Senate hearing on Tuesday that the fund, which has the job of helping meet the Commonwealth's superannuation liabilities, had acquired a stake in the Czech Republic division of cigarette maker Philip Morris.
The Czech division outraged tobacco industry opponents in 2001 when it commissioned a report from consulting firm Arthur D. Little International which found the savings to public finances from smokers' early deaths, together with cigarette tax revenue, outweighed the burden of smoking related healthcare and other costs.
The company later issued a statement saying it ''deeply regrets any impression from this study that the premature deaths of smokers represent a benefit to society''.
The fund acquired the stake, now worth about $200,000, last May, but it was only revealed on Tuesday after questions from Greens senator Richard Di Natale. The $84 billion fund announced last October its governance committee was reviewing its tobacco investments.
Fund managing director Mark Burgess would not say when the review would be completed.
Mr Burgess said the fund held investments in 15 tobacco manufacturers, worth a total of $221 million. He said the fund did not directly invest in tobacco stocks but owned shares in tobacco companies through external fund managers who chose the stocks.
Senator Di Natale said the fund's tobacco holdings showed its policy on environmental, social and governance issues was ''pretty useless'', but Mr Burgess insisted its policy was ''world class''.
In 2011 the fund stopped investing in landmines and cluster munitions.
Australia is a signatory to the World Health Organisation Framework Convention on Tobacco Control, which recommends governments have no financial interest in tobacco, but this is a non-binding guideline.
Senator Di Natale, who wants the fund to drop its tobacco investments as soon as possible, said he was ''disappointed that we're investing in a company that believes that it's good health policy and good economic policy to encourage people to smoke''.
He said among the tobacco companies the fund had invested in was an Indonesian firm that had added sweetened filter tips and had sponsored schools.