Businesses say investing is already values-based in reaction to Jim Chalmers’ economic vision
Business groups say they are already delivering on social objectives as part of their environmental, social and governance (ESG) obligations.
As the Treasurer embarks on the biggest shift in government policy in decades, setting out to create a values-based economy, business groups say they are already delivering on social objectives as part of their environmental, social and governance (ESG) obligations.
Jim Chalmers has pledged to ditch the free-market policy consensus that has steered rich countries over two generations and fashion a values-based economy in partnership with business, unions and community groups.
Businesses – including Australia’s biggest private hospital operator Ramsay Healthcare, Medibank, Latitude Financial and superannuation funds – say they are already investing in values-based responsible projects but support greater engagement and collaboration with the federal government.
Latitude chief executive and former Australia Post boss Ahmed Fahour said the idea of a social impact fund, flagged by Dr Chalmers, was similar to the public-private partnerships that have built bridges, roads, airports and hospitals during the past 20 years.
“What the Treasurer is doing, with a loudspeaker, is indicating that government and business can come together and really do something important here. In some ways, what he’s talking about is the marrying of economic prosperity and wellbeing,” Mr Fahour said.
“It reminds me quite a bit of what Australia has done over the last 20 years, with both government and investors, in public-private partnerships (PPP).
“And if you think about what the PPP (model) has done, around bridges, roads, airports, hospitals, education, it’s brought together super funds, private investors, financial institutions, banks and government to deliver certain economic outcomes, which have been highly successful.”
Carmel Monaghan, chief executive of the local arm of Australia’s biggest private hospital operator Ramsay Healthcare, said the private sector has an “important role to play in creating a better place to live and work” and offered to flesh out how the fund would operate with the Treasurer. “We welcome the Treasurer’s desire for a system where Australians and businesses are clear and active participants in shaping a better society,” Ms Monaghan said.
“Ramsay has an extensive sustainability program and our largest shareholder, the Paul Ramsay Foundation, is a leading force for social good in this country.
“While it is unclear at this stage how social impact investing would apply to health care, given the ageing population and the increased costs of delivery, any new ways of funding health care in the future is worth exploring.”
Australia’s biggest health insurer, Medibank, said there was a role for public private sector partnerships, particularly in the health system.
According to the latest spending data, federal and state governments spent $142.6bn on health care in the 2020 financial year, a 5 per cent increase on the previous year. This comprised 70 per cent of overall health spending, which totalled $202.5bn.
Medibank is already investing in researching new models of care and how it can improve access to health services across Australia while keeping a lid on costs. But the spokeswoman said when the government works with the private sector it delivers change at a greater pace, highlighting the partnerships forged during the Covid-19 pandemic.
Medibank has set aside $250m to advance its health services strategy, which has included taking ownership stakes in short stay hospitals. A KPMG report found the short-stay model could halve the length of a hospital for hip and knee replacements, and if it was adopted more broadly could save 217,000 bed days by 2030 – taking pressure off the national health budget.
“Sharing the outcomes of these pilots with government will help support large-scale change in health,” the Medibank spokeswoman said.
Debby Blakey, chief executive of the health workers superannuation fund HESTA, said the government could not solve “large-scale, complex issues” alone.
“To deliver strong, long-term investment returns for multiple generations of members we need to address systemic risks like climate change and gender inequity that can impact both the value of their investments and their financial security,” Ms Blakey said.
“We want to work collaboratively with governments across the country to look at new investment models that can create strong, long-term investment performance for our members by investing to address issues holding back economic productivity and our potential as a nation.”
Nicole Bradford, head of sustainable investment at Australian Retirement Trust, said it was planning to finance new social and affordable housing in Queensland. This initiative came before Dr Chalmers’ manifesto.
“While the deal is subject to finalisation, we plan to invest up to $150m for a subordinated debt tranche, with QIC as investment manager. Up to 1200 new homes are to be delivered through the partnership, largely consisting of social and affordable housing,” Ms Bradford said.
Hostplus chief executive David Elia said every time the $81bn superannuation fund for hospitality and tourism workers made an investment “there is some impact on society”.
“We have always been ‘impact investors’,” he said. One example of this is the Sydney Entertainment Centre, which came about by a PPP between the NSW government and the private sector where Hostplus was an allocator of capital.
Former president of the Business Council of Australia Tony Shepherd said the current push on ESG is part of a values-based market economy. “Co-investment between government and the private sector happens occasionally and can work for both parties, provided it’s done well.” he said.
“Of course, PPPs are also a form of co-investment, with the government providing the land and the asset passing to government at the end of the concession. Before the government sold out at a profit, WestConnex used a blend of public and private finance. The challenge always is making sure there’s a strong commercial case for the investment, and reasonable returns for the taxpayer.”
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