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How best to harness mining boom windfall

A sovereign wealth fund is the route to long-term security.

A sovereign wealth fund is the route to long-term security.

THE gulf between rhetoric and action is a jarring feature of our political landscape. There is a surplus of talk about putting the nation's long-term interests to the fore, yet short-term partisan considerations often dominate. Politicians naturally have an eye to the next election, but their primary concern ought to be policies that benefit coming generations, not just the existing pool of voters.

There is a lesson to be drawn from the crucible of democracy, ancient Greece. In Homer's Odyssey, the heroic but flawed Odysseus has his men tie him to the mast in anticipation of the overwhelming desire he knows will strike him when he hears the Sirens sing. The Age has long argued the mast to which our lawmakers should strap themselves is a sovereign wealth fund. It would safeguard the yield of the mining boom to create the intergenerational assets necessary for a growing population's prosperity. Other resource-rich exporting nations harness the proceeds in this way. With a quarter of our population, Norway has amassed some $600 billion in the 20 years since its fund began.

Singapore and South Korea, too, have sovereign wealth funds. Both were mentioned last week by New South Wales Liberal senator Arthur Sinodinos, who, inter alia, used his first speech to support the establishment of such a fund in Australia "when it is affordable". The mining boom, which is set to generate billions of extra taxation revenue - a community windfall that will be augmented by the freshly minted minerals resource rent tax - makes it not only affordable, but imperative. Senator Sinodinos' words carry more weight than those of most new parliamentarians as chief of staff to then prime minister John Howard from 1997 to 2006, he spent almost a decade close to the pinnacle of political and policy power. He said of the mooted fund: "It could acquire stakes in individual companies to increase our exposure to the newly growing emerging markets and economies to reinforce our influence in the global economy and thereby strengthen our national security. Such a fund could also kick-start a genuine venture capital market, still stalled after all these years, so that more Australian inventions and innovations can be commercialised here rather than abroad."

This adds to growing support for a wealth fund. One of Mr Howard's successors at the head of the Liberal Party, Malcolm Turnbull, who might still return to the leadership, is a backer, as are many economists and a key business lobby, the Australian Industry Group.

The precedents are not only offshore. The Howard government set up the Future Fund to cover public service superannuation. That was followed by education and health funds, which are overseen by the Future Fund Board. But these merely provide cornerstones for a true sovereign wealth fund the edifice remains to be constructed.

The chairman of the Future Fund, former Commonwealth Bank chief executive David Murray, has perhaps helped provide some motivation. Late last week he lambasted the Gillard government for borrowing funds to buy votes and for complacency in the face of the risk that the European debt crisis will cause another global financial crisis.

His warning was buttressed by comments from his successor at the Commonwealth Bank, Ralph Norris, who argued that global financial markets "effectively froze" last week after Germany, even with the lure of an unusually elevated interest rate, was unable to entice investors to buy the ?6 billion of debt it needed to sell.

A sovereign wealth fund is a form of insurance against economic difficulties - it is too late to use it against any imminent crisis, but over the longer term it would provide a buffer. It is overdue and merits bipartisan support. There is an evident way to establish the fund what is required is political will.

A shot in the arm for disease controlONE of the ironies of living in a rich country with reliable access to high-quality health and education is that people who have never known anything else can underestimate the importance of vigilance. Perhaps this, as much as the fears about the safety of vaccines held by a small group of parents, explains Australia's less than perfect immunisation rate. Concern about this - in the context of the renewed prevalence of diseases such as whooping cough - has led the government to require that parents have their children fully immunised or forgo three payments, worth up to $2100 in total, available under family tax benefit A.

While it may seem heavy-handed to penalise parents for what many would regard as a legitimate choice, this measure is an important reminder to parents of the value of vaccinations. Only a small proportion of the population is old enough to recall the horrific effects of polio, which crippled 40,000 Australian children and caused the death of many others from the 1930s until the introduction of the polio vaccine in the 1950s. Even fewer, if any, would have firsthand experience of the devastating effects of smallpox, diphtheria or scarlet fever, although reminders can be readily found in older cemeteries where young children were interred in large numbers.

Globally, these illnesses persist, and huge numbers of children in poor countries still die unnecessarily. There is good news though in the World Health Organisation's recent finding that immunisation now averts an estimated 2.5 million deaths every year in all age groups from diphtheria, tetanus, pertussis (whooping cough) and measles.

The importance of vaccinations in places where diseases had apparently been wiped out is exemplified by the increase in whooping cough cases in Australia, with the highest levels of the disease in two decades. Notifications have jumped from 4864 in 2007 to 34,785 last year. As well as covering pertussis, children for the first time will be expected to be vaccinated for meningococcal C, pneumococcal and chickenpox, meaning that 12 potentially fatal diseases are covered by the immunisation scheme. Happily, combined vaccines mean a smaller number of injections.

There is, of course, a wider responsibility than to one's own family. Widespread immunisation prevents the spread of infections and consequently disease can be eradicated. This is how smallpox was eliminated from the world. A financial penalty to encourage parents to have their children vaccinated, is a small price to pay for a community's well-being.

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