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In February 2023, Jim Chalmers penned a lengthy essay that called for a “better capitalism, uniquely Australian.” This will be achieved, the Treasurer wrote, by “seeking value and impact, strengthening safeguards and guardrails in areas of unchecked risk.” Using terms familiar in the impact world, Chalmers laid out his vision of socially mindful capitalism.
There was a media storm in response (unpacked in length for this publication in March). A conservative outlet predicted an “anti-capitalist nightmare” under the approaching Budget. The essay’s reception reminded not only of certain pundits’ skill for hyperbole, but of how impact investing remains unpalatable to some despite mainstream adoption of ESG as a metric. As we round out the year, let’s take a look at how Chalmers has pushed back against the noise. That is, what impact has Chalmers’ Treasury pledged to make?
In May, Chalmers delivered the Federal Budget for 2023/24, clearly drawing on the ideas he raised in the essay. To be dispersed over the next six years, Treasury committed A$199.8m to addressing “entrenched community disadvantage” through a number of initiatives. The majority of those funds – $100m – will be used to establish the Outcomes Fund, making social impact investments in projects by “states, territories and service providers.” In addition, a smaller portion of $11.6m over three years will be used for grants and education about social impact investing through the so-called Social Enterprise Development Initiative.
It appears the big four banks – NAB, ANZ, Commonwealth Bank and Westpac – have quietly not acted on their support for an impact investment initiative. In January 2023, the AFR reported a coalition interest of the banks to match Government’s $200m in funding for an impact investing ‘wholesale fund’—a fund open to private investors. However, no such deal has materialised to date in the Budget or in the press.
The Budget also addressed impact investing in foreign markets. Run by the Department of Foreign Affairs and Trade (DFAT), the Emerging Markets Impact Investment Fund (EMIIF) will receive $210m over the next four years for investment in the Indo-Pacific region. The EMIIF’s website currently states investment in three foreign funds – Ascend Vietnam Ventures (Vietnam); Lendable (UK/Kenya/Singapore); and Sweef Capital (Singapore) – that variously operate loan assistance schemes and venture capital.
As with all impact investments, there will need to be a scrupulous test of outcomes. A $200m pledge means nothing unless it generates the results it aimed to achieve. At time of publication, little has been said in the media about the Outcomes Fund, suggesting it is still being established. One would hope an update would arise before next year’s Budget.
The next half-year will indeed be a test for Government’s impact initiatives as the next Budget approaches. Some positive direction will be needed to placate the critics. Will Chalmers make a real impact with these initiatives? As the funds slowly go where directed, only time will tell.
