What Norway built

The Government Pension Fund Global — officially known in Norwegian as the Statens pensjonsfond utland, and commonly called the Oil Fund — was established by act of parliament in 1990. The first transfer of petroleum revenue into the fund was made in 1996. The idea was straightforward: every krone the Norwegian government received from the oil and gas industry would go into the fund. The government could spend only the returns — not the capital itself.

By the end of 2025, the fund’s value was NOK 21,268 billion. In Australian dollar terms, that is approximately A$2 trillion. It is the largest sovereign wealth fund on earth — larger than the next largest by a substantial margin, ahead of the Abu Dhabi Investment Authority (approximately US$900 billion) and China’s China Investment Corporation (approximately US$1.3 trillion).

The fund owns approximately 1.5 per cent of every publicly listed company on earth. It holds stakes in more than 7,000 companies across 60 countries. It is the world’s largest single owner of listed shares.

Per Norwegian citizen, the fund is worth US$340,000 — or approximately NOK 3.8 million. For a Norwegian family of four, that is more than A$1.4 million in accumulated public wealth.

In 2025 — which the fund’s managers described as one of the best vintages in the history of the fund — it generated profits of approximately €565 million per day. The annual profit of A$350 billion was its highest since inception.

To understand what that means: Norway’s sovereign wealth fund made more money in 2025 than the total value of Australia’s Future Fund. From investment returns alone. Without touching the capital.

But the most important number is not 2025’s return. It is this: more than half of the fund’s total value now comes from investment returns on the money already in it — not from new resource revenues. The fund has become self-sustaining. The original petroleum revenues seeded it. Investment returns have now grown beyond the seed itself. Norway has permanently converted finite resource wealth into permanent financial assets.

The Norwegian model did not emerge by accident or geology. Norway is not uniquely resource-rich compared to Australia. It is not uniquely lucky. What it did differently was make three deliberate decisions in the decades after the oil boom began — decisions that Australia made the opposite of.

Decision 1: Tax the industry at 78 per cent. Norway’s tax rate on petroleum profits is 78 per cent. This comprises a standard corporate tax rate of 22 per cent and a special petroleum tax of 56 per cent — technically structured at 71.8 per cent to account for the deductibility of the corporate tax, maintaining the 78 per cent combined marginal rate.

The petroleum tax is designed to be neutral with respect to investment — meaning it applies to super-profits above a normal rate of return, and the Norwegian government reimburses companies for tax losses during unprofitable periods, removing the investment risk that would otherwise deter exploration. The structure means private companies still have incentive to invest, while the public captures the lion’s share of the extraordinary profits from extracting a publicly-owned resource.

At this rate, in 2025, total tax payments from Norwegian petroleum activities were approximately NOK 374 billion. Net government cash flow from the petroleum sector was approximately NOK 521 billion. In 2023, when energy prices were elevated due to the Ukraine war, the Norwegian government received approximately A$209 billion in revenue from its oil and gas sector — 64 per cent of total industry revenue.

Compare that to Australia in 2023: total oil and gas revenue of approximately A$164 billion, of which the public received approximately A$16 billion — just 9.8 per cent. Norway captured 64 per cent of its resource revenue. Australia captured less than 10 per cent.

We tax them quite heavily. It’s a 78% tax rate. And they told us that was impossible, but they come and invest, and we tax them and they stay.Jens Stoltenberg, Prime Minister of Norway, Harvard University, 2014

Decision 2: Own the industry, not just regulate it. In 1972, the Norwegian parliament passed a unanimous act establishing Den Norske Stats Oljeselskap — the State’s Oil Company. Today this is known as Equinor. The Norwegian government owns 67 per cent of it.

This state ownership gives Norway a second stream of resource revenue beyond taxation: dividends. In 2024, Equinor generated NOK 701 billion (US$62.5 billion) for the Norwegian government. In 2025, the projection was NOK 643 billion. These funds flow directly into the sovereign wealth fund.

The Norwegian government also maintains a system called the State’s Direct Financial Interest (SDFI) — direct equity stakes in individual oil and gas fields, pipelines, and onshore facilities. The state covers its share of production costs and receives a corresponding share of income from each production licence. This is not regulation. It is ownership.

Australia has no equivalent. The gas companies operating in Australia — Chevron, Woodside, INPEX, Shell, Santos — are entirely or predominantly foreign-owned private entities. The Australian government has no direct equity stake in the fields they operate. It relies entirely on the tax system to capture public value from public resources. As Articles 1 and 2 of this series documented, that tax system currently collects less than beer excise.

Decision 3: A fiscal rule that prevents spending the capital. When Norway established the fund, it also established a fiscal rule: the government could draw on the fund’s returns for the annual budget, but not its capital. The rule has been adjusted over time — currently no more than 3 per cent of the fund’s value can be diverted to the national budget annually — but the principle is inviolable: the seed money stays in the fund. Only the harvest is available for spending.

This rule has produced a remarkable outcome: the fund now finances approximately 20 per cent of Norway’s national budget from returns alone, while continuing to grow. In good economic years, excess petroleum revenue is saved. In downturns, the government can draw slightly more, providing a fiscal buffer that insulates Norway from commodity price volatility.

Norway was anxious to avoid the instability, corruption and weak economic growth experienced in other resource-rich economies and designed its system specifically to avoid the ‘resource curse’ — the paradox in which resource wealth produces political dysfunction and economic underperformance. The fiscal rule is central to that protection.

The following table sets out the documented difference between Norway and Australia’s approach to resource wealth. All figures are from primary sources cited in this article.

The point of the fund is not the fund itself. The point is what it makes possible.

Norway provides free tertiary education to its citizens. University tuition is zero. HECS debt does not exist. In Australia, as documented in Article 2 of this series, university graduates repay their education debts to the government at a rate 168 per cent higher than gas companies pay the petroleum resource rent tax. In Norway, the gas revenues fund the education rather than the graduates funding the gap left by inadequate gas revenues.

The fund also finances approximately 20 per cent of Norway’s national budget from returns alone, providing a stable, non-inflationary source of public revenue. This is budget stability that does not depend on income taxes, GST, or the economic cycle. It comes from the compounding returns of accumulated resource wealth.

The natural resources in the ground, that’s something we own in common. It’s not private ownership.Jens Stoltenberg, Former Prime Minister of Norway, Harvard University, 2014

This is the principle that underpins everything. Not hostility to private business. Not resource nationalism for its own sake. The straightforward recognition that petroleum in Norwegian waters belongs to Norwegians — and that the tax and ownership system should reflect that ownership by returning the majority of the wealth to its actual owners.

Australia discovered gas in commercial quantities decades ago. Queensland’s LNG exports have been running since 2015. Western Australia has been exporting LNG since the 1970s in small volumes, and at scale since the 1990s. The revenues have been enormous.

Australia’s Future Fund holds approximately A$226 billion. It was established in 2006 by the Howard government to fund future public service pension liabilities — not as a repository for resource revenues. It is not a sovereign wealth fund in the Norwegian sense. It is not resource-linked. It does not grow from gas or mineral revenues. It ranks approximately 16th globally among sovereign wealth funds, behind Norway, Qatar, the UAE, Singapore, China, Kuwait, and Saudi Arabia.

The LNG boom that made Australia one of the world’s largest exporters produced no equivalent fund. In the period from 2015 to 2025, Australian LNG exports earned the companies extracting the gas hundreds of billions of dollars. The PRRT — the resource tax designed to capture public value from those earnings — collected approximately A$1.5 billion in its most recently reported year. The gap between what the resource generated and what Australians received from it was not invested anywhere for future generations. It was distributed to shareholders.

The most common argument against the Norway comparison is geological rather than political: Australia exports gas, not oil; LNG projects have different economics; the comparison is not fair.

This argument deserves a direct answer.

Norway has, over its petroleum history, exported both oil and gas. Its fund was built primarily from oil revenues in its early decades. But the structural features of the Norwegian model — the 78 per cent tax, the state ownership, the fiscal rule, the fund — are not specific to oil. Norway’s petroleum tax system applies to all petroleum products extracted from its continental shelf. The principles are applicable to any resource extraction.

Former Australian Prime Minister Kevin Rudd argued explicitly, when he proposed the Resources Super Profits Tax in 2010, that Australia could and should capture resource rents from its gas boom in the same way Norway had from oil. That proposal was killed by a A$22 million industry advertising campaign, as this series will document in Article 6.

There is nothing stopping Australia from imposing the kind of taxes on oil and gas that countries like Saudi Arabia, Norway, and Qatar utilise successfully.Richard Denniss, Australia Institute

The Norwegian model works because Norway decided its resources belonged to Norwegians. The Australian model fails because Australia has, consistently and across governments of both parties, decided that the revenues from extracting Australian resources belong primarily to the companies extracting them. Both decisions are political. Only one is in the public interest.

The Australia Institute has calculated that replacing Australia’s broken PRRT with a flat 25 per cent export tax on gas — still less than a third of Norway’s 78 per cent — would raise more than A$17 billion per year. That is enough to quadruple Commonwealth spending on housing.

If Australia had captured resource rents from the LNG boom at even half of Norway’s rate, the compounding effect over decades would have built a sovereign wealth fund of genuinely national significance. The moment has not yet entirely passed — existing gas projects will continue producing for decades, and new fields are still being developed.

But the window is narrowing. Global LNG demand is shifting as renewable energy grows. The most profitable years of the Australian LNG boom — 2022 and 2023, when Ukraine war energy prices produced windfall revenues — have passed. As Article 1 of this series documented, the A$66 billion in current export earnings is already well below the A$92 billion peak.

Every year of inaction is a year of lost accumulation. Every cargo that ships from Darwin and Gladstone without adequate resource rent capture is a permanent transfer from Australians to foreign shareholders. The fund Norway is building grows compound year on year. The fund Australia is not building accrues nothing.

Norway’s sovereign wealth fund made A$350 billion in 2025. It earns approximately A$1 billion per day. It is worth US$340,000 for every Norwegian citizen. It finances 20 per cent of Norway’s national budget from returns alone. Norwegian university education is free. The capital is intact and growing, because by law only the returns can be spent.

None of this is luck. None of it is geography. Norway has a population of five million people and a single North Sea basin. Australia has a population of 27 million and some of the world’s largest gas reserves. Norway built US$1.9 trillion. Australia built A$226 billion — and not from gas.

The difference is the political decision made in 1971, when the Norwegian parliament adopted its Ten Commandments of Oil Policy and declared that the petroleum beneath its waters belonged to the Norwegian people. And the discipline to maintain that decision for fifty years, across multiple governments and parties.

Australia made a different decision. It made it when the PRRT was designed in the 1980s with deductions that suited oil but not LNG. It made it when the Resources Super Profits Tax was abandoned in 2010. It made it when the 2024 PRRT reform was deliberately weak enough that the gas industry cheered its passage. It made it every year it provided A$14.9 billion in fossil fuel subsidies while the petroleum resource rent tax collected A$1.5 billion.

Article 4 of this series asks who benefits from that decision. The answer is not Australians.