Treasury dismisses wealth fund
Senior Treasury officials have sounded the death knell for the argument for Australia to establish a sovereign wealth fund which would bank consecutive budget surpluses on the back of mining profits.
Macroeconomic experts Phil Garton and David Gruen say Australia's large amount of superannuation savings and the nation's ability to mine resources well into the future ensured the country already had many of the benefits of a wealth fund.
Greens MP Adam Bandt this week had his proposal for an Australian wealth fund, to secure the nation's financial future when the mining boom ended, rejected by the major parties in Parliament.
A spokesman for Treasurer Wayne Swan said the government was acutely aware of the need to save more in the good times and confirmed this would be done through the superannuation of eight million full-time working Australians.
The report written by the two Treasury bureaucrats, now available on Treasury's website, noted the money collected by workers via superannuation had the same affect on the economy as government savings in the form of a wealth fund. These savings already smoothed out the amount of spending and consumption in the good years, tightened the reins on inflation and could be used in emergencies.
The two men compared Australia to Norway which has an impressive wealth fund worth almost $600 billion but the nation's workers bank much less superannuation, 2 per cent of earnings compared to 9 per cent in Australia, a figure that will rise to 12 per cent.
Norway was also closer to the euro zone and relied more on exports than Australia which left the European nation more susceptible to economic shocks if exports suddenly dropped.
''In both countries, the national balance sheet will deteriorate without an ongoing commitment to re-invest the proceeds of these sales in financial assets,'' the report said.
''This is an important issue for both countries, but of more immediate relevance for Norway because it has much more limited reserves for resources, its economy and public finances are more dependent on resource revenue and it faces greater long-term fiscal challenges.''