Clarity urged on sovereign wealth
THE Treasury Secretary has urged caution on the concept of a national sovereign wealth fund, questioning whether it would be the best way to achieve its mooted aims.
THE Treasury Secretary has urged caution on the concept of a national sovereign wealth fund, questioning whether it would be the best way to achieve its mooted aims.Martin Parkinson said although there were "well-motivated intentions" in the growing calls for Australia to follow countries such as Chile and Norway by channelling mining wealth into a sovereign fund, more clarity was needed on what the exact aim of such a fund should be.Dr Parkinson said Australia's focus should be on delivering surpluses and reducing net debt rather than "getting ourselves all hung up on whether we do it by reducing gross debt on issue or maintaining gross debt and building up financial assets in a sovereign wealth fund."The idea of a new Australian sovereign wealth fund has gained currency, backed by the likes of the opposition frontbencher Malcolm Turnbull and the outgoing Commonwealth Bank chief executive, Ralph Norris.But Dr Parkinson, speaking at an American Chamber of Commerce in Australia function in Melbourne yesterday, said "different commentators" calling for a new fund had "different motivations", with some wanting the fund to better spread the benefits of the mining boom, for example.Dr Parkinson said Australia's superannuation system already acted as a series of "mini wealth funds", helping to ensure some of the mining boom's proceeds were invested. And trying to contain the exchange rate through a fund investing in offshore assets was "unlikely" to work, he said, adding that measures to bring down the value of the dollar could lead to Australia "throwing away" some of the mining boom wealth.He said he was not suggesting the idea of a new fund was without merit "but that we should be clear about what role it could play."