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An Australian Resources Sovereign Fund: A Strategic Reform Proposal to Boost Productivity, Resilience, and Fiscal Sustainability

Author

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  • Smyth, Russell
  • Vespignani, joaquin vespignani

Abstract

This submission proposes a national economic reform package, designed to mitigate the structural distortions arising from the "Dutch disease" in Australia. While resource booms have boosted national income, they have also weakened tradable sectors, entrenched regional inequalities, and exposed the economy to external commodity price shocks. The centrepiece of this submission is a proposal to establish an Australian Sovereign Resource Fund, inspired by the Norwegian experience, which would improve productivity, build economic resilience, and strengthen fiscal sustainability. The proposed reform package would explicitly address the exchange rate dynamics of commodity supercycles and reduce distortions to the Australian dollar, which are typical of a resource-rich small open economy.

Suggested Citation

  • Smyth, Russell & Vespignani, joaquin vespignani, 2025. "An Australian Resources Sovereign Fund: A Strategic Reform Proposal to Boost Productivity, Resilience, and Fiscal Sustainability," MPRA Paper 125350, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:125350
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    References listed on IDEAS

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    1. Knop, Stephen J. & Vespignani, Joaquin L., 2014. "The sectorial impact of commodity price shocks in Australia," Economic Modelling, Elsevier, vol. 42(C), pages 257-271.
    2. Russell Smyth & Joaquin Vespignani, 2022. "Increasing Australian Lithium Production to Meet Electric Vehicles and Net Zero Global Targets: A Decarbonisation Tax Discount?," Economic Papers, The Economic Society of Australia, vol. 41(4), pages 385-389, December.
    3. Ton S van den Bremer & Frederick van der Ploeg, 2013. "Managing and Harnessing Volatile Oil Windfalls," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(1), pages 130-167, April.
    4. Michael Plumb & Christopher Kent & James Bishop, 2013. "Implications for the Australian Economy of Strong Growth in Asia," RBA Research Discussion Papers rdp2013-03, Reserve Bank of Australia.
    5. Hilde C. Bjørnland & Leif A. Thorsrud, 2016. "Boom or Gloom? Examining the Dutch Disease in Two‐speed Economies," Economic Journal, Royal Economic Society, vol. 126(598), pages 2219-2256, December.
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    Cited by:

    1. Jamel Saadaoui & Russell Smyth & Joaquin Vespignani & Yitian Wang, 2025. "Critical Minerals in an Age of Geopolitical Rivalry: Stockpiling, Refining Constraints, and the Limits of Friend-Shoring," CAMA Working Papers 2025-72, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

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    Keywords

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    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market

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