Who benefits, not who owns, is what matters

WHO owns Australia? This is the rhetorical question implicit in the foray by Greens leader Senator Bob Brown into foreign ownership of the mining sector. Senator Brown's assertion that there is too much foreign ownership and his associated call for a tougher mining tax than that proposed by the federal government has added significance because he and his colleagues on Friday assumed the balance of power in the upper house.

Senator Brown finessed his position in a speech at the National Press Club in Canberra, saying he is not calling for a reduction in foreign ownership of the mining sector but for a debate about wealth generated by the mining boom. It is a fortunate clarification. Australia has long relied on foreign capital to help unlock our natural resources. And The Age has long held this is as it should be, both in terms of principles and practicalities. There is insufficient capital in Australia to develop our abundant resources adequately. That is the practical part.

The principle to which we adhere is that an open, trade-focused economy best provides the material well-being of our citizens. As long ago as the 1970s, then prime minister Gough Whitlam made the fundamentally important move of opening the economy to the world by slashing tariff barriers that were misallocating scarce resources by protecting inefficient local producers.

Australia does not need to change its policy on foreign investment. It must remain open. There is already a robust safeguard the federal government has long had veto on national security grounds, through the Foreign Investment Review Board, over sizeable purchases of domestic assets by offshore entities. The board's involvement is automatically triggered by proposed purchases worth $231 million or more. The key issue today in all of this is the return on assets, whether they are owned by domestic or international investors. It would be folly for any Australian government to seek to restrict the free flow of investment funds in or out of our nation. Our living standards would fall.

Natural resources are owned by the Australian people, and the people have an inalienable right to a fair share of the exploitation of those assets. That benefit should extend well beyond the creation of ports and transport links required to get the resources to the global market.

The Age holds that some of the billions upon billions of taxation revenue generated each year, a sum that will be boosted should the proposed minerals resource tax become law as expected, should be channelled to a sovereign wealth fund. It is here that Senator Brown has fallen in behind Malcolm Turnbull, the former - and perhaps future - opposition leader, who has been advocating the establishment of such a fund.

It is the best way to share the dividends of the mining boom with future generations. As we have pointed out, other exporting nations, particularly oil producers, harness the proceeds this way. Norway, with only a quarter of our population, did it 20 years ago and now has some $600 billion in its fund.

But we have only taken small steps so far. The Future Fund was set up by the Howard government to cover public service superannuation. It does not draw directly on resource revenue. Since then infrastructure, health and education funds have been set up, overseen by the Future Fund board. But these initiatives do not add up to a true sovereign wealth fund with dedicated revenue to buttress economic development.

The question ought not be who owns Australia, but whether Australians are getting appropriate benefit from our assets in an open economy. A sovereign wealth fund would deliver that, and deserves bipartisan support.