If Paul Cleary is to be believed in his recently published book, Too Much Luck: The Mining Boom and Australia’s Future, the resources boom is the worst thing that ever happened to Australia.
He maintains that the mining industry is under-taxed and under-regulated and in need of “stronger and more effective government control”. Yet at the same, he argues that recent governments have also squandered the revenue windfall from the mining boom. These positions are difficult to reconcile.
Cleary’s proposals for greater taxation and regulation of the mining sector and increased use of a sovereign wealth fund (SWF) would only enhance the capacity of governments to squander the boom.
Cleary, a journalist at The Australian and researcher at ANU, has in part based his book on freedom of information (FOI) requests made to Treasury, the Reserve Bank of Australia and other agencies on some of the public policy issues raised by the mining boom. Ironically, these FOI documents are far less revealing than what Treasury and other official sources have put on the public record.
Pushing a sovereign wealth fund
Cleary tries hard to find support for a sovereign wealth fund among the documents even though they mostly relate to experience in overseas economies that have little in common with Australia. He is forced to concede the Treasury’s “curious bias against sovereign wealth funds”.
He neglects to mention comments in a speech by then-Treasury Secretary Ken Henry to Australian Business Economists on May 18, 2010 arguing against a SWF. These comments are far more compelling than the Treasury working papers Cleary cites.