AUSTRALIA, which is introducing some of the toughest anti-smoking laws in the world, has invested $147.7 million in tobacco company shares to pay for politicians' retirements.

The government's Future Fund - established in 2006 to cover the pension costs of retiring lawmakers, judges and public servants - held stakes in 14 tobacco companies on December 31, 2010, according to reports obtained through FOI requests.

Australia raised tobacco taxes by 25 per cent last year and could become the first nation to ban brand names on cigarette packaging. Former prime minister Kevin Rudd pledged $85 million for an anti-smoking advertising campaign last April.

''It seems incongruous that the government is investing in companies that will not prosper,'' Steve Hambleton, vice-president of the Australian Medical Association, said. ''It doesn't make sense when the government has launched the strongest anti-smoking measures in the world.''

The Future Fund's holdings included $46.4 million in British American Tobacco, $36.5 million in Philip Morris International and $26.1 million in Lorillard. A statement from the Melbourne-based Future Fund said it invested in many entities and activities, provided these activities were legal in Australia. ''The board's mandate doesn't direct it in relation to investing in particular industries or activities, but does set a clear financial-return objective.''