Adam Bandt (Melbourne, Australian Greens) Share this | Hansard source

There is much talk of the miracle of the mining boom, but the reality is that we have a Jekyll and Hyde economy: one side of the economy is at war with the other. The more the mining bubble grows, the more the rest of the economy suffers—and we know what happens to bubbles: eventually they burst. At this rate, when the bubble bursts there will be little left to keep the economy going. So we need action: we need action to take the heat out of the dollar, we need action to ensure the enormous wealth of this mining boom is not squandered—squandered either by shifting the profits overseas, along with the iron ore and the coal; or squandered by spending today what the mining tax will raise instead of saving for tomorrow.

At the tax forum last year the Greens advocated that a substantial proportion of the proceeds from the mining boom should be quarantined for these two reasons. The first reason is intergenerational equity. There could be a fund that could be drawn on after the resources are exhausted as a means of sharing the benefits with future generations. The second reason is to address the challenge of the two-speed, or Jekyll and Hyde economy. A sovereign wealth fund investing offshore could help to counteract the appreciations of the Australian dollar, which have eroded the international competitiveness of important export industries such as sophisticated manufacturing, tourism and international education.

Sovereign wealth funds have operated well overseas, in places such as Norway, where they have invested proceeds from their North Sea oil. So we should commit to putting in place a sovereign wealth fund, and the first step is a thorough examination of how it could be done. Consequently, my motion calls for the Productivity Commission to properly examine the issue and report back. Sovereign wealth funds are generally state owned investment funds composed of financial assets such as stocks, bonds, real estate or other financial instruments. Around 36 countries have such funds; some countries even have more than one. Currently, $4.2 trillion worth of assets are under management by these types of funds—that is an increase of 11 per cent from 2010.

In some respects Australia already has a type of sovereign wealth fund. The Future Fund was established in 2006 to meet unfunded pension liabilities for former public servants and Defence employees. I do have criticisms of how the Future Fund has invested some of its revenue—most notably in tobacco shares, and I commend my colleague Senator Richard di Natale, who is working to address this issue—however, I do believe the Future Fund has shown that it is possible for such a fund to function effectively and with fairly wide support in Australia. I believe there is a need, and a space, for another sovereign wealth fund that could be an important economic stabiliser and provide the country with protection from overheating or from a future economic downturn. A new sovereign wealth fund could also help provide for the country's infrastructure needs.

In the time available I do not intend to try and debate all the issues relating to sovereign wealth funds. It is a complex and serious issue and deserves detailed discussion and examination, as my motion suggests. I do note that there are some high-profile advocates for the establishment of a sovereign wealth fund. Individuals such as Ralph Norris, previously the CEO of the Commonwealth Bank; and Mike Smith, the CEO of ANZ; as well as Fairfax chairman and RBA board member Roger Corbett. I also note the member for Wentworth has advocated for such a fund to be established, and I note his detailed and thoughtful speech on this topic in April last year. I anticipate that there will be those who do not support the establishment of such a fund at this time because, they will say, the budget needs to return to surplus first. I do not necessarily agree with that, but my motion is not inconsistent with it. My motion allows for a thorough examination to take place over the coming months, and those who believe that that ought to happen first can still nonetheless support this motion.

Mr Briggs interjecting—

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