The Government Pension Fund of Norway appears to work well. So when Australia has reduced it's limited mineral resources to hollow shells in the ground, Norway will be sleeping soundly. Food for thought I reckon.

So let's have a tax on carbon instead! Shame we have economists spouting ideas like this. Why not throw in a tax on nitrogen, phosphorous and potassium as well?

Thank you Andrew for the first sensible and accessible article I have read on the issue. You make a sound argument for your case, (so lacking in today’s media hyperbole and the focus group slogan led politics). The article may have even been persuaded me to a different point of view.

Billy, i do not agree with your assessment of Leigh's article.

There are a few pararagrphs which question the need for a sovereign wealth fund, but mostly it is mere propaganda for the business as usual approach by Labor (and how good are we).

As far as intellectual insight into the issues, I rate the article a joke, particularly his mention of a carbon tax and saving the Great Barrier Reeef when actual global emmissions are going up and up, and Labor relies even more on coal exports for its export wealth.

but then again, what do you expect from a politician where truth often gives way to propganda or worse

for instance, are there liabilities building for the public purse?

Is there a need to save for future infrastucture needs?

Are there signs that the future of the international economy may not be as rosy as optimists suggest?

I think if we ar going to discuss sovereign wealth funds, we might one consider if there are some real reasons for it rather than just kid ourselves everything is ok.

Yes, full credit to Norway. while it too may not be a perfect society, I think their deabte over a sovereign fund to deal from its mineral wealth may have been a bit more sophisticated.

and yet, all the ALP does is create debt .. go figure

ALP tax and spend, as in "oh hey, is that another tax, levy, surcharge coming our way?"

Will it eventuate in more waste, populist blather and unplanned excess before being cancelled, or buried?

(rhetorical, requires no answer, as it is self evident.)

Which is why someone from the ALP talking about a Sovereign Wealth fund, can only mean .. another tax coming our way.

Are we all part of a focus group, reactionary study now Andrew?

please excuse my poor grammar on comments, need to slowdown and double check before posting.

Rats. I was going to post here, but Billy C read my mind and said it for me.

Australia is a structural capital importer with a central bank operating under a Taylor-type regime. Keeping the gvt share of national income artificially high (by saving through a SWF) and investing a portion of it abroad (what an SWF would do) does not make any sense. Just look at what New Zealand is doing. The best investment of Australian gvt savings is in domestic infrastructure (with rigorous efficiency testing). If there is a need to reduce gvt revenue volatility, it should be done for that purpose, and not with an intergenerational excuse. If you want to weaken the AUD, just change the ARB's mandate to allow for higher inflation for a given level of economic activity, that would lower interest rates and weaken the currency. No need for this fiscal policy-in-reverse..

For a professor in economics, this was a particularly dense article.

Under Howard, the unemployment was less than 4%, and additional government spending on infra structure would have the effect of competing with business and driving up inflation.

A sovereign wealth fund is pointless when there is large debt, and an investment in reducing debt would be the obvious solution. Even now savings could be made by simply cutting out the bureaucratic bloat and waste that is the hall mark of a labor government.

Labor is not capable of controlling spending, and the main argument against a sovereign wealth fund is that it is too hard for Labor.

SWFs in democracies tend to constrain future gvt's ability to redistribute surplus revenue (eg by lowering taxes, spending on partisan causes like social security, culture, mining subsidies etc), or spending within a class-based political tradition. In Australia with its recent history of targeted vote buying based on detailed polling, surplus revenue is key to the success of incoming governments, especially Coalition ones.

Any government under the current circumstances would find it hard to do vote buying, and a gvt constrained by "minority" status (half the gvts in the EU are minority ones and they do at least as well as the US now but cannot be expansionary) but, more importantly, Greens (a true minority and a controversial one) preferences that do not fit with conventional economic policymaking and/or mainstream economic preferences, will find that even harder. Hence a rational gvt of the day should find its reelection chances below par (although there is a lot of time value left) and look for policies that would (a) be unopposable by the Opposition and (b) credibly handicapping the incoming gvt's ability to redistribute revenue. This is a strategy used with much success by US Republican tax cutters ("starving the beast"). It would make political sense (of course not economic sense) for the Treasurer to promote a SWF of sorts(rather than reducing debt) once electoral success seems unattainable and while partliamentary support still exists. The NBN was a great device to do something similar (and with the chance of public appreciation) but it may not be enough.