The Drum: Sovereign wealth sounds fine in theory ...

There is a lot of talk about Australia establishing a sovereign wealth fund.

Other resource-rich countries have established them. One of the best known is Norway, but according to the International Monetary Fund, over 20 countries have such funds; and over half of the total assets in these funds are held by countries which are significant oil and gas exporters.

Several business leaders – including the Commonwealth Bank’s Ralph Norris, the ANZ Bank’s Mike Smith and Tabcorp’s Elmer Funke Kupper – have called for Australia to establish a sovereign wealth fund. The reason most commonly cited: we should put away some of the proceeds of the resources boom for a rainy day.

Strong demand for Australia’s natural resources – such as iron ore, coal and natural gas – mean that Australian companies are currently exporting larger quantities, at much higher prices, than in the past. 

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