In a new report the International Monetary Fund (IMF) has warned Australia to save the revenue that it is generating from the mining boom in order to deal with the upcoming challenge of handling an aging population.
According to the IMF the increasing dependence on mining for Australia’s economy will make it highly vulnerable to the commodity price falls.
The IMF has also suggested that the money be used to set up a sovereign wealth fund that will ensure that the future generations of the nation get benefited by the mining boom. It should also be used to enhance health care facilities in anticipation of the aging population native to the nation.
However Treasurer Wayne Swan has dismissed the formation of a sovereign fund for more equal distribution of the money from the mining boom. The Australian government is also planning to boost superannuation savings using the proceeds from its planned mining tax. Mr Swan said that they were acutely aware of the need to save more in good times and that's why they had strict fiscal rules in place that have the nation on track to get the budget back to surplus in 2012-13.
Glenn Stevens, the governor of the Reserve Bank has also spoken out about this issue earlier in the year. Mr Stevens had said that more needed to be done to keep the mining revenues invested as savings rather than spending it extravagantly. He had said that the government would need to take action to ensure that the financial prosperity of the current time is carried forward to future generations. The China boom would not last forever and Australia needs to be prepared for that.