AUSTRALIA HAS JUST announced a 40 percent tax on the “super profits” of its resource developers.

No doubt Joe Wasia, who has pointed out that PNG’s meagre cut from the LNG Project is only 19.4%, will be encouraged. Why?

Because it appears that the people giving the Australian government its advice on resource management are also the same people giving the PNG government its advice on resource management.

It seems, however, that Australia is only lending half an ear to that advice. Paul Cleary, writing in the Australian newspaper, says that PNG is a much better listener. He says PNG has adopted a “much bolder and more transparent framework’ for managing its resources boom.

“Under its medium-term fiscal policy, PNG can only spend the average level of resources income.  All tax revenue above this amount must be invested in long term-term capital works projects, used to retire debt or saved in trust funds.

“PNG also plans to set up a sovereign wealth fund, similar to the highly successful Norwegian model, to save revenue from its planned massive gas plant in the Southern Highlands.”

The irony is that Australia is providing technical assistance to set up this fund but doesn’t follow the same policy itself.

If it had, Cleary points out, Australia would have collected a savings pool of at least $100 billion over the last ten years to use on infrastructure development and to keep the exchange rate at a competitive level for its exporters.

What did Australia do instead? It splurged the money and drove up inflation and interest rates.

Cleary says that Australian Treasury economists have been impressed with PNG’s performance.

Perhaps Australia is a bit too good at giving advice and not so good at taking it.

On a more sombre note, we know what has happened to trust funds in PNG in the past.

Good planning is one thing but keeping the pollies sticky fingers out of the pie might be a bit harder. If PNG is going to do that it needs to start slapping those greedy little digits right now.