" Economically responsible ", something col has no idea about.
For instance, col wants to sell Western power, pay off $ 8 billion of his debt ( no one else's ) ,with the proceeds and splash $ 3 billion to get the unemployed ( of his making ) working.
Now philosophically I have somewhat of a dilemma, I'm of the view Utilities shouldn't be run by government , yet I dont like the idea, of col having run up the debt on the credit card, pay it off by hocking the furniture.
Personally I would prefer selling the asset ( it cant be an asset, if its not able to be sold), and with the proceeds buy into the three major publicly listed iron ore producers, thus having a seat at the decision making table, and thus resurrecting the influence of power in the mining Industry in WA, which under dropkick col has been surrendered by the government.
Review
Norway resources: the good oil on a trillion dollar miracle
Trillion Dollar Baby: How Norway Beat the Oil Giants and Won a Lasting Fortune, by Paul Cleary
So, how did the government of a relatively remote European nation, with a population of a few million and a traditional reliance on primary industries such as forestry and fishing, manage to establish what has grown to become the largest sovereign wealth fund in the world?
To the casual observer, Norway may appear to have hosted an economic miracle. The nation has invested the revenue it gains from the sale of crude oil, a non-renewable resource, to finance the future wellbeing of its people.
During the past half century the fund has grown to be worth $US850 billion ($1.13 trillion) and is on track to reach about $US1 trillion in value by 2020.
Meanwhile, estimates of the remaining Norwegian oil reserves range from about 10 years’ worth to approximately 25.
In
Trillion Dollar Baby, Paul Cleary, an experienced Australian journalist specialising in the resources sector, points out that although this enviable position wasn’t easy to achieve, it was no fluke.
“While it’s true that other resource-rich countries are more diverse and politically divided, there’s still a great deal of common sense and good practice that can be learned from Norway’s 50 years of intense debate, policy formations and much trial and error,” he writes.
The Norwegian fund not only has interests reaching out around the world, it also seeks to influence business culture in terms of ethics, since the investments are extensive yet selective. Funded as it is by revenues from the extraction of fossil fuel, the fund avoids investments in unethical industries and dealings with corrupt regimes, and there is even a policy against excessive remuneration of chief executives.
Recently the fund has been directed to avoid enterprises whose operations produce greenhouse gas emissions, and has divested itself of holdings in the coal industry.
Because it is a publicly owned and administered fund, the Norwegian government is answerable to the Norwegian people in relation to its financial performance and business practices. Indeed, Cleary says one of the secrets of the success of Norway’s fund management philosophy is that it proceeds from the assumption that the country’s natural resources belong to everyone.
The sense of national obligation means the fund is managed with caution. The emphasis in recent years has shifted away from equity markets in developing countries towards real estate in leading world cities.
The book’s title may imply a struggle between Norway and the largest oil companies on the planet, though such conflict appears largely to have been avoided. In contrast to the pressure applied on the British government by American officials and corporations in relation to the exploitation of oil in the North Sea, Norway made it clear to the US that its national interest would not be compromised. “There’s no real evidence of such an aggressive lobbying approach by the oil companies, perhaps because they would have known that Norway’s firm stand would doom any such attempts to failure,’’ Cleary writes.
Of course, sovereign fund success in one country is not automatically replicable in another. Norway has experienced at least one major recession since the fund began, though its economy did not suffer the same way as Britain did in the 1970s and 80s, with runaway inflation, currency crises and rapid industrial decline leaving the British unable to capitalise on their oil windfall. According to Cleary, “it’s fair to say that most of the UK’s North Sea oil revenue was spent on unemployment benefits”.
Despite missteps, Norway clearly had the political and collective will to take charge of its future. The nation was perhaps lucky to have the revenue stream begin as late as it did so it could learn from the experience of others, and its investments by and large proved to be sound.
Like American investment guru Warren Buffett, Norway became a wealthy and financially secure nation by living within its means. Other resource-rich countries, such as Australia, which seem to be locked in a permanent debt crisis with a shrinking revenue base and absence of effective political decision-making, may have something to learn.
Norway, from the outset, did not succumb to the temptation to squander the income from its oil riches, as Cleary notes.
“This record is all the more remarkable because many other countries, and not just poor ones, have blown their boomtime windfalls on largesse, whether in the form of grand edifices, military hardware, white-elephant projects or cash splashes for swinging voters,” he writes.
Cleary’s book is an engaged, thoroughly researched account of one of the most remarkable successes in public enterprise witnessed in recent times. Anyone interested in what governments can do for their people despite the pressures of the electoral cycle and other challenges to sensible long-term planning should read this book. Some of our more opportunistic politicians, as well as their supporters, would be well advised to join them.
http://www.theaustralian.com.au/art...e/news-story/02c157d020b2e26aa506323ae07803d4
Raider
