A Sovereign fund from resources good but hard to secure its proper use

Comments on Peter van Onselen “Greens' support for a sovereign wealth fund to quarantine mining proceeds deserves praise”, 9/03/2011, http://www.theaustralian.com.au/business/opinion/greens-take-a-bow-for-the-sovereign-wealth-fund-policy/story-e6frg9if-1226018002862


A sovereign wealth fund is not a bad idea, though it would be better called a sovereign natural resources fund.

There are a number of issues related to such an idea.

Firstly, the Greens may want to increase the tax for mining much more heavily than reasonable, that can cause enormous damages to the Australian mining industry and hence the whole economy.

Secondly, the current government is only interested in suing the mining tax for its own budgetary purpose, and is not really interested in the long term, especially for the future generations. The Future fund set up by the previous coalition government has been used already by the Rudd/Gillard Labor government. That is a very bad precedent.

Thirdly, there can hardly be real guarantee that the current and any future government do not use it to cover its own short term budgets.

Should such a fund be established, there must be much stronger and more stringent conditions for any government to use it.