Norway's wealth and happiness: a lesson in resource taxation?
Norway, a small Nordic country with a population of around 5 million, has achieved an impressive feat: ranking among the happiest and wealthiest nations globally. But what's the secret behind this success? It's not just about their stunning fjords and rich cultural heritage. A significant part of the answer lies in their approach to managing and taxing natural resources.
The country's $US2.144 trillion sovereign wealth fund, the largest in the world, booked a staggering $US102.56 billion profit in the third quarter of 2025. This fund is partly responsible for Norway's high standard of living, with investments in real estate, renewable energy, and global equities. But here's the twist: it all started with oil.
The Norwegian Model: A High-Tax Approach
Norway imposes a 56% 'special tax' on oil and gas companies, on top of a 22% corporate tax rate. This high tax rate is a key differentiator from other countries, including Australia. The revenue generated is reinvested into the sovereign wealth fund, ensuring a stable and prosperous future for Norwegians.
Australia's Resource Taxation: A Different Path
Australia, on the other hand, introduced the Petroleum Resource Rent Tax (PRRT) in the late 1980s. This federal tax applies to profits from the sale of petroleum products in Australian Commonwealth waters. However, it has been criticized as 'broken', even after recent changes, and is expected to raise less revenue than initially forecast.
The Comparison: Norway's Success and Australia's Potential
In 1969, Norway discovered a massive offshore oilfield, and over time, the government took a larger stake in the proceeds, gaining 50% ownership in every production license. This led to the establishment of their sovereign wealth fund in 1996. Today, Norway owns almost 1.5% of all shares in the world's listed companies, with the fund's value now largely derived from investments in equities, real estate, and renewable energy.
Australia's Future Fund, ranked 16th globally, pales in comparison. Economists argue that Australia could secure better returns on its resources by imposing higher taxes, similar to Norway. This is particularly relevant in the context of the global energy crisis, where Norway saw a significant increase in tax revenue from its resources.
Critical Minerals and Government Intervention
The discussion around resource taxation extends to critical minerals. In late 2025, the US and Australia agreed on an $US8.5 billion critical minerals deal, and governments have spent billions on critical mineral developments and bailouts. Experts argue that public intervention is necessary to stabilize these uncertain markets, but the risk should be shared more equitably.
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