The nation's sovereign wealth fund has invested $8.6 million in Israeli weapons company Elbit Systems and $13.6 million in Lockheed Martin, which supplies military war planes to the Israeli Air Force, according to a recent Future Fund investment report.
It has also injected $165.3 million into Palantir, which has supplied AI-driven technologies to Israel for its offensive in Gaza.
Another $72.2 million has been devoted to Bank Hapoalim, Bank Leumi and Israel Discount Bank, which were named on a United Nations database as furthering Israel's illegal settlement activity in the West Bank, East Jerusalem and the Golan Heights.
Established two decades ago, the total of funds managed by Future Fund was $337.2 billion as of March 31.
In a letter sent to Treasurer Jim Chalmers and Finance Minister Katy Gallagher from the Australia Palestine Advocacy Network, the federal government has been urged to address the Future Fund's investments and stymie the flow of Australian money to Israeli weapons in its May budget.
"The Future Fund was set up for our children's future, but it's being used to fund the killing of children in Palestine," the advocacy network's executive officer, Katie Shammas, said.
Australia has recognised the state of Palestine and for years recognised Israeli settlements in the occupied territories as illegal.
The federal government has also sanctioned Israelis responsible for inciting and perpetrating settler violence.
But Ms Shammas warns the sovereign wealth fund's investments create a contradiction that also puts Australia at risk of breaching international law, with the 2024 Advisory Opinion of the International Court of Justice reaffirming the settlements' illegality.
The IDF's bombardment and starvation of Gaza has killed more than 72,000 people and destroyed the territory's infrastructure, leaving four per cent of its cropland undamaged and accessible, according to the UN World Food Program.
A genocide case against Israel has also been brought to the International Court of Justice, but the nation's prime minister has rejected the accusations.
Israel's military campaign in Gaza began after designated terror group Hamas killed 1200 Israelis and took about 250 hostages on October 7, 2023.
A federal government spokesperson told AAP the Future Fund invests independently of the government and cannot be legally directed where to invest.
However, the spokesperson said the Future Fund Board invests in accordance with relevant laws, including applicable sanctions, and excludes activities banned under treaties and conventions signed by the government.
"The board and the Future Fund Management Agency have robust processes in place to ensure these exclusions are applied appropriately," the spokesperson said.
AAP has approached the Future Fund for comment.
