The response to the Australian National University's decision to divest itself of holdings in certain companies has been way out of proportion to the importance of the decision – and both sides of the debate are long on rhetoric and short on facts.
The argument has focused on whether the industries represented by the companies being divested are important for Australia's economy, especially the contributions from Infrastructure Minister Jamie Briggs and the Treasurer.
This argument is overdone. The ANU holds about $16 million in shares in the seven companies (disclosure: the managing director of one of the seven, Iluka Resources, is on the board of the CIS). That $16 million is about 1% of the university's total investment holdings, and the revenue from the entire portfolio was barely 5% of the university's total revenue.
The ANU's holdings represent less than 0.05% of the combined market capitalisation of those companies which approaches $40 billion.
These investments are not financially significant for the university or the companies, so the impact on the economy as a whole will almost certainly be negligible. Which makes the overreaction from politicians, up to and including the Prime Minister, puzzling. At a time when the government is trying to encourage greater financial independence among universities, it seems very odd to try and micromanage their investment decisions.
Unless the ANU's new strategy mentions an exciting new investment in magic beans, if it's not imposing greater costs on the taxpayers then it really shouldn't be the business of government.
The government's interest here is limited to protecting taxpayers by ensuring the ANU exercises due diligence and care with taxpayers' funds. In the absence of evidence that this investment policy will materially impact ANU's revenue the government should be cautious about interfering.
Divestment can be an expression of free speech. In fact it is one of the more valuable aspects of speech because people are a lot more honest with their money than they are with their slogans (as the failure of 'buy Australian' industry policy continually demonstrates).
The problem is when supposed social responsibility transfers costs to taxpayers. Too many non-government organisations and other rent-seekers want to have their public funded cake and eat their private progressive values too.
By all means, use your free speech to criticise industries you don't like and divest any shares you hold, but don't think this entitles you to extra taxpayer money if it leaves you out of pocket.
Simon Cowan is a Research Fellow at The Centre for Independent Studies.
Home > Commentary > Opinion > Let them divest, but not with taxpayers cake
Let them divest, but not with taxpayers cake
The argument has focused on whether the industries represented by the companies being divested are important for Australia's economy, especially the contributions from Infrastructure Minister Jamie Briggs and the Treasurer.
This argument is overdone. The ANU holds about $16 million in shares in the seven companies (disclosure: the managing director of one of the seven, Iluka Resources, is on the board of the CIS). That $16 million is about 1% of the university's total investment holdings, and the revenue from the entire portfolio was barely 5% of the university's total revenue.
The ANU's holdings represent less than 0.05% of the combined market capitalisation of those companies which approaches $40 billion.
These investments are not financially significant for the university or the companies, so the impact on the economy as a whole will almost certainly be negligible. Which makes the overreaction from politicians, up to and including the Prime Minister, puzzling. At a time when the government is trying to encourage greater financial independence among universities, it seems very odd to try and micromanage their investment decisions.
Unless the ANU's new strategy mentions an exciting new investment in magic beans, if it's not imposing greater costs on the taxpayers then it really shouldn't be the business of government.
The government's interest here is limited to protecting taxpayers by ensuring the ANU exercises due diligence and care with taxpayers' funds. In the absence of evidence that this investment policy will materially impact ANU's revenue the government should be cautious about interfering.
Divestment can be an expression of free speech. In fact it is one of the more valuable aspects of speech because people are a lot more honest with their money than they are with their slogans (as the failure of 'buy Australian' industry policy continually demonstrates).
The problem is when supposed social responsibility transfers costs to taxpayers. Too many non-government organisations and other rent-seekers want to have their public funded cake and eat their private progressive values too.
By all means, use your free speech to criticise industries you don't like and divest any shares you hold, but don't think this entitles you to extra taxpayer money if it leaves you out of pocket.
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