Australia’s $250 billion sovereign wealth vehicle, the Future Fund, has delivered record returns to taxpayers. But behind the celebratory numbers lies an uncomfortable truth: much of that profit has been extracted from the booming trade in weapons and war. At a time of surging conflicts in Gaza and Ukraine, the fund’s portfolio has grown fat on defence stocks, even as critics warn that Australia risks complicity in atrocities abroad.
A Surge in Defence Profits
Between October 2023 and June 2025, the value of shares held in eight of the world’s largest weapons manufacturers rose by $76 million. This growth coincided with the sharpest increase in global military spending since the Cold War. Among the beneficiaries was Elbit Systems, Israel’s largest private arms manufacturer and a company deeply entwined with the Israeli Defence Force. According to newly released disclosures, the Future Fund’s holding in Elbit jumped from just $489,000 to $2.69 million in less than two years.
Elbit markets itself as the backbone of Israel’s drone fleet, which has been extensively deployed in Gaza. Its catalogue includes command-and-control systems, armed remote-control boats, armoured vehicles, and military aircraft technologies. It is also the company whose drones were reportedly used in the strike that killed Australian aid worker Zomi Frankcom in 2024. That association alone has fuelled calls for divestment. Yet instead of retreating, the Future Fund has doubled down.
Lockheed Martin and the F-35 Supply Chain
The Fund’s stake in Lockheed Martin, the U.S. defence giant behind the F-35 fighter jet, also surged, climbing from $71 million to $88 million, a 23% increase. Israel operates F-35s in its bombing campaigns, and more than 75 Australian firms feed into the fighter jet’s global supply chain. This has prompted fresh appeals for Canberra to suspend exports linked to the program. For critics, the contradiction is glaring: while the Albanese government gestures towards solidarity with Palestinians, Australian industry is helping to build the aircraft that bomb their homes.
Rolls-Royce, Boeing and the Expanding Portfolio
The list of beneficiaries does not end there. The Future Fund’s stake in Rolls-Royce leapt from $2 million to $5.5 million, driven both by post-pandemic demand for civil engines and a surge in defence procurement. The company supplies the propulsion systems for the AUKUS submarine partnership, positioning it at the heart of Australia’s most controversial defence initiative. Boeing, another of the Fund’s major holdings, has enjoyed parallel gains as governments worldwide pour money into rearmament.
A broader review of disclosures shows the Fund’s investments span most of the global arms industry, including Thales, BAE Systems, Northrop Grumman, and Rheinmetall. Together, these firms are central actors in the international conflicts that dominate today’s headlines.
Ethical Blind Spots
While the Fund maintains an exclusion list, the criteria are strikingly narrow. Eleven companies are blacklisted under conventions or treaties ratified by Australia, covering cluster munitions, landmines, chemical and biological weapons, and some nuclear weapons. Yet even here the record is mixed. As of October 2023, the Fund held over $560,000 in shares of Leonardo SpA, an Italian defence conglomerate excluded by other major funds due to its role in nuclear weapons systems.
Critics argue that the exclusions are tokenistic. Greens Senator David Shoebridge, who obtained the 2023 investment list through Freedom of Information laws, condemned the holding in Elbit. “Public pressure forced the Future Fund to abandon tobacco,” he said. “That proves it can apply ethical standards when it wants to. But it is choosing not to. There must be a red line against investing in the global harm industry.”
The Australian Centre for International Justice has echoed these concerns. Acting director Lara Khider cited the International Court of Justice’s advisory opinion that Israel’s occupation of Palestinian territories violated international law and amounted to apartheid. “When public funds are invested in companies credibly linked to serious violations in Gaza, Australia risks breaching its own international obligations,” she warned.
The Future Fund’s Defence
For its part, the Future Fund insists its defence investments are incidental, determined by external managers tracking global indices. “Our portfolio exclusions are based on conventions ratified by Australia,” a spokesperson said, “and they apply to cluster munitions, anti-personnel mines, chemical or biological weapons, and some nuclear weapons.” The defence is legalistic rather than moral: what is not banned by treaty is deemed permissible.
The numbers tell a different story. In the last financial year, the Fund’s assets reached $250 billion for the first time, delivering a return of 12.1 percent, double its stated target. While most of its income is directed towards meeting public service superannuation liabilities, it also manages smaller pools such as the Housing Australia Future Fund, which has grown to $10.9 billion.
Treasurer Jim Chalmers has attempted to reframe the mandate, directing the Fund to consider “national priorities” such as housing, infrastructure, and the transition to net zero. Yet the stark reality remains: in an era of escalating global conflict, the Fund is profiting handsomely from war.
The Bigger Picture
The revelations raise fundamental questions about the role of public wealth in a globalised arms trade. At a time when the government proclaims its recognition of Palestinian statehood, taxpayer money is flowing into the very companies supplying weapons to Israel’s war in Gaza. At a time when climate change threatens planetary security, Australia’s sovereign fund is profiting more from weapons than from renewable energy.
These contradictions expose a deeper problem: the prioritisation of financial returns above ethical responsibility. Until Australia confronts the moral cost of profiting from war, every dollar earned in the Future Fund’s balance sheet will carry the shadow of blood spilled abroad.
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