Show us the money, Wayne!

A sovereign wealth fund is essential for Australia. We don’t have one. We should.

While the world must envy our natural resources, they’d have to be shaking their heads at how we’re squandering it. Norway, with less than 5 million people, has saved around $500 billion from its North Sea oil windfall. And they put it in a fund to underwrite their long-term prosperity. In comparison, we haven’t really saved anything.

Folks, the day will come when this historic mining boom — $182 billion last year alone — runs out of steam. When that happens, we need a Plan B, and Plan B will require a pool of money, i.e. a sovereign wealth fund. Shaving a bit off the tanker loads of money our great miners are making will help stabilise the economy, provide more certainty for future generations and be a buffer in times of emergency or natural disaster.

Like the Norwegians, other countries with once-in-a-generation opportunities are way ahead of us. Think oil-rich Kuwait, United Arab Emirates and Bahrain, and copper-rich Chile. Even the Israelis are viewing their recent major offshore gas finds as an opportunity to build a future fund. Sure, they have certain “issues” that threaten their existence, but the basic logic still applies.

In the midst of huge commodity booms these countries are preparing for the challenges of tomorrow, using the good times to cushion the inevitable bad ones.

But how about the future fund you might ask? Ain’t that going to serve us well? Yes but that money pool (now $75 billion) is earmarked for public sector pensions. It will, however, free up tax revenues for other post commodity boom programs.

Finally, here’s an apt thought from Henry Lawson, who, quoting an American in a story set in the late 1800s, wrote “you’ve got the makings of a glorious nation over here, but you don’t get up early enough!”