Norway in the 1970s began taxing oil profit from its north shelf operations and storing this money in what is now the petroleum fund of Norway. This vast collection of cash is now worth $450 billion + US dollars and is increasing at a rate in excess of 10% per annum. Norway only has a population of 4.6 million people so this nest egg represents a substantial amount of money. In addition to this fund the government and central bank of Norway also own a pension fund with a value in excess of $791 billion.
What does all this mean to us in Australia? Well in short it should really mean a hell of a lot. Australia has vastly more mineral and fossil fuel wealth than Norway ever has had yet has virtually no cash reserves at all. We have to borrow money to improve our school infrastructure, our rail infrastructure resembles that of a third world country and a vast chunk of our roads are privately owned/leased and operated. Basically, we are broke and have a list of projects in need of urgent repair that grows daily and has no means of being funded.
How the hell has this been allowed to happen? Well two main reasons, most of the companies that sell our mineral wealth are foreign owned and also pay rather pitiful ‘mining leases’ rather than heavy direct taxing on profits. The ones that are Australian owned, usually get government ‘subsidies’ even though they are highly profitable export earners. Effectively we have failed to tax our mineral exports to an appropriate level or monitor our reserves efficiently.
We need an urgent audit of our resource value and need to start thinking about how we can use this revenue stream (effectively our only export industry) to develop Australia’s economic, infrastructure and social resources. Australia has been treating its resources like Saudi Arabia or Nigeria (Spending it on consumer bullshit and failing to distribute the wealth) and has absolutely failed to create adequate wealth reserves for the nations future. In 100 years time we will have nothing to show for our ‘Mineral Boom’ unless we can act decisively to start saving this money and using it to improve our healthcare, foster new export industries and improve our economic longevity.
China recently sent a decree to its large government owned companies to ‘secure‘ as many resources as possible over the next 5 years. Many of these resources to ‘secure’ are no doubt on our soil. This is almost a declaration of economic warfare and our governments are failing to act in our national interest. Maybe part of the Henry tax revue could be the establishment of a sovereign wealth fund like Norway’s to sure up our wealth and help protect our future.