WA Today reported that the wave of 10000 job cuts in the Australian steel industry announced by BlueScope Steel on top of 400 foreshadowed by OneSteel last week, blamed on the high dollar, has reignited calls for a sovereign wealth fund to rein in the exchange rate.

Mr Paul Bloxham prominent HSBC economist and former Reserve Bank economist, said a sovereign fund would probably require higher taxation of mining.

He said “'If you held that extra revenue in a sovereign fund, you would be slowing the pace of structural change in the economy and potentially put downward pressure on the exchange rate.”

Mr Bloxham said that “We are well into this mining investment boom now. What would have helped is if we had had a larger mining tax it would have discouraged some of this investment from happening so rapidly. We could probably all do with a little less structural economic change.”

A sovereign wealth fund is a savings pool used by commodity rich countries such as Norway to invest the windfall of a resources boom or to soften the blow from a sudden fall in commodity prices.

(Sourced from watoday.com.au)