SYDNEY—In a blow to those calling for an Australian sovereign-wealth fund to lock away mining-boom proceeds, opposition Treasurer Joe Hockey, one of the country's most influential politicians, said Thursday that their case is premature and Australia is already well-served by its pension-savings pool.
Mr. Hockey's remarks followed a rush of calls in recent weeks from lawmakers, policy makers and others for the government to follow the examples of countries such as oil-rich Norway and invest some of the proceeds of the current boom. The backers include David Murray, chairman of the Future Fund, which holds about 70 billion Australian dollars (US$75 billion) for public-sector pensions; Warwick McKibbin, a member of the Reserve Bank of Australia board; leading bank executives; and bond-fund titan Pacific Investment Management Co. The RBA itself has signaled the need for discussion.
The environmentalist Greens party, a key power broker, on Thursday said it would actively push the government to set up the fund.
But to Mr. Hockey, "it's a very premature debate in Australia." The existing Future Fund and the private pension-savings market, which holds around A$1.4 trillion, are sufficient, at least until the country pays off its net debt, an event he said is probably some years away. "We already have a sovereign wealth fund," he said.
Mr. Hockey's opposition represents a major setback for proponents of the policy, given that the ruling minority Labor government also opposes the fund.
In the country's first hung Parliament since the 1930s—Prime Minister Julia Gillard depends on a clutch of nonparty lawmakers and the Greens to keep her in office—Mr. Hockey's Liberal Party and its coalition partner, the rural-based Nationals, have huge sway over policy even in opposition. Not that the Liberals are unanimous; Mr. Hockey's views clash with those of former leader and fellow shadow-cabinet member Malcolm Turnbull.
Resource-rich nations and global trading powers like Brazil and China are increasingly looking to invest proceeds from surging surpluses and commodity exports. Australia's government has pledged to return a budget surplus by the fiscal year beginning July 1, 2012, a rare and enviable position among the countries of the developed world.
World-wide, some US$4 trillion is managed by sovereign-wealth funds, of which the US$600 billion Abu Dhabi Investment Authority is thought to be the largest. Some have suggested Australia use Norway's oil fund, Norges Bank Investment Management, as a model. Set up in 1990 to invest proceeds from the country's petroleum reserves, it had grown by the end of 2010 to about US$548 billion.
Mr. Hockey is bullish on Australia's economy and said the Australian dollar's attractiveness as a reserve currency is growing. Given the lethargic economies elsewhere in the developed world, central banks around the world are rushing to buy Australian bonds, dealers say.
One area the Liberal Party would seek to change if it took office is the process of foreign investment approvals, currently governed by the Foreign Investment Review Board.
"We would certainly look at it," Mr. Hockey said. "You need to have a predictable process." Only weeks ago, Treasurer Wayne Swan, citing review-board advice, blocked Singapore Exchange Ltd.'s proposed takeover of Australia's main stock-market operator ASX Ltd.
"The government needs to explain clearly to international investors how the process works," Mr. Hockey said.
While committed to reducing the government's net debt, the Shadow Treasurer is also trenchant in his support for a liquid bond market and said Australian state governments have a role to play and shouldn't be afraid of borrowing for major infrastructure works.
"You need to have a deep and liquid bond market. There will need to be always some level of government and semi-government debt," Mr. Hockey said.
Source: http://online.wsj.com
Mr. Hockey's remarks followed a rush of calls in recent weeks from lawmakers, policy makers and others for the government to follow the examples of countries such as oil-rich Norway and invest some of the proceeds of the current boom. The backers include David Murray, chairman of the Future Fund, which holds about 70 billion Australian dollars (US$75 billion) for public-sector pensions; Warwick McKibbin, a member of the Reserve Bank of Australia board; leading bank executives; and bond-fund titan Pacific Investment Management Co. The RBA itself has signaled the need for discussion.
The environmentalist Greens party, a key power broker, on Thursday said it would actively push the government to set up the fund.
But to Mr. Hockey, "it's a very premature debate in Australia." The existing Future Fund and the private pension-savings market, which holds around A$1.4 trillion, are sufficient, at least until the country pays off its net debt, an event he said is probably some years away. "We already have a sovereign wealth fund," he said.
Mr. Hockey's opposition represents a major setback for proponents of the policy, given that the ruling minority Labor government also opposes the fund.
In the country's first hung Parliament since the 1930s—Prime Minister Julia Gillard depends on a clutch of nonparty lawmakers and the Greens to keep her in office—Mr. Hockey's Liberal Party and its coalition partner, the rural-based Nationals, have huge sway over policy even in opposition. Not that the Liberals are unanimous; Mr. Hockey's views clash with those of former leader and fellow shadow-cabinet member Malcolm Turnbull.
Resource-rich nations and global trading powers like Brazil and China are increasingly looking to invest proceeds from surging surpluses and commodity exports. Australia's government has pledged to return a budget surplus by the fiscal year beginning July 1, 2012, a rare and enviable position among the countries of the developed world.
World-wide, some US$4 trillion is managed by sovereign-wealth funds, of which the US$600 billion Abu Dhabi Investment Authority is thought to be the largest. Some have suggested Australia use Norway's oil fund, Norges Bank Investment Management, as a model. Set up in 1990 to invest proceeds from the country's petroleum reserves, it had grown by the end of 2010 to about US$548 billion.
Mr. Hockey is bullish on Australia's economy and said the Australian dollar's attractiveness as a reserve currency is growing. Given the lethargic economies elsewhere in the developed world, central banks around the world are rushing to buy Australian bonds, dealers say.
One area the Liberal Party would seek to change if it took office is the process of foreign investment approvals, currently governed by the Foreign Investment Review Board.
"We would certainly look at it," Mr. Hockey said. "You need to have a predictable process." Only weeks ago, Treasurer Wayne Swan, citing review-board advice, blocked Singapore Exchange Ltd.'s proposed takeover of Australia's main stock-market operator ASX Ltd.
"The government needs to explain clearly to international investors how the process works," Mr. Hockey said.
While committed to reducing the government's net debt, the Shadow Treasurer is also trenchant in his support for a liquid bond market and said Australian state governments have a role to play and shouldn't be afraid of borrowing for major infrastructure works.
"You need to have a deep and liquid bond market. There will need to be always some level of government and semi-government debt," Mr. Hockey said.
Source: http://online.wsj.com
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