What Australia should be doing to get financial and cultural benefits from the boom

 • Divided into separate accounts (probably though not necessarily of equal size), for clearly designated purposes such as pre-funding some of the costs associated with population ageing; providing for the transport, health and education infrastructure of the future; drought and disaster-proofing the nation (to the extent it’s possible); addressing Indigenous disadvantage; assisting the transition to a ‘low-carbon’ economy; and providing for tax cuts and other forms of fiscal stimulus after the mining boom is over. This list isn’t meant to be exhaustive or exclusive.

A sovereign wealth fund would, in effect, convert at least some of the revenue from what is a finite and depleting stock of natural resources into a potentially permanent stream of payments from a stable or even growing stock of financial capital.

In that sense, it would provide a means by which the present generation of Australians – those of us who, by co-incidence rather than as a result of our own efforts, happen to have custodianship of the wealth which has been lying under, or around, this continent for millennia, at a time when the people of the two most populous nations on Earth are, as a result of their own efforts, willing to pay very high prices in order to procure the resources on which that wealth is based – can discharge the moral responsibility I believe we have to future generations of Australians to leave to them a greater inheritance, rather than expropriating all of it for ourselves.

The cultural legacy

The greatest resources boom in our history should also enable us to build, and to bequeath to our descendants, a better society. As The Economist magazine wrote recently, in an editorial accompanying a lengthy survey of the Australian economy:

Australians must now decide what sort of country they want their children to live in. They can enjoy their prosperity, squander what they do not consume, and wait to see what the future brings; or they can actively set about creating the sort of society that other nations envy and want to emulate”. Such societies “cannot be conjured up overnight, least of all by government. They are created by the alchemy of artists, entrepreneurs, philanthropists, civic institutions and governments, coming together in the right combination at the right moment. And for Australia…this is surely such a moment.

What kind of society, what cultural legacy, will the beneficiaries of the present mining boom and the wealth created by it leave to future generations of Australians?

Americans of today remember the entrepreneurs of the late 19th and early 20th centuries – Andrew Carnegie, John D. Rockefeller, Andrew and Paul Mellon, Henry Clay Frick, Henry Clay Folger, Samuel Guggenheim, Joseph Hirshhorn, Duncan Phillips, J. Paul Getty, Charles Hackley and others - not for the steel mills, the oil companies or the banks and stockbroking firms which they created (although they did lay the foundations for the emergence of the U.S. as the world’s most powerful economy after World War I), but for the galleries, libraries, museums and educational institutions which they endowed.

I suspect future generations of Americans will remember Bill Gates – and will only ever have heard of his wife Melinda – because of the work of the Foundation which they have established; and of Warren Buffet, because of the US$30bn which he has gifted to the Gates Foundation, rather than because they love Microsoft and its products, or because they have a clue what Berkshire Hathaway was. Ronald O. Perelman is more likely to be remembered for his endowments, thus far totaling over US$200 million to various health providers and for cancer research, than for being the largest shareholder in Revlon.

Today’s Australians, if they know of Alfred Fenton at all, know of him not because of the businesses he founded, including the one which ultimately became ICI and part of which is now known as Orica, but because of the £378,033 bequest he left to the National Gallery of Victoria, which has been used to purchase over 15,000 works of art with a value most recently estimated at over $1 billion.

Similarly Sidney Myer is surely less well known today for the stores that still bear his name than for the Sidney Myer Music Bowl in Melbourne (something which, as a kid growing up in Tasmania, I could never figure out why was in Melbourne, rather than in Sydney), and for the generosity, which has been continued by his descendants.

I would argue that the great mining companies of today, the BHP Billitons and the Rio Tintos and the Xstratas, won’t be remembered in 100 years time for the holes they are digging now – and nor will their CEOs, or individual mining entrepreneurs like Clive Palmer, Gina Reinhart and Andrew Forrest.