Peter Costello has had plenty of ups and downs as Treasurer since March 1996, but when asked about his toughest single day in the job, he cites Christmas Day 1997 – the day South Korea ran out of foreign reserves.

Australia ended up lending the South Koreans $1 billion as part of a co-ordinated bailout, but have a look where the South Koreans have got to now?

Wikipedia’s league ladder of foreign reserves places South Korea sixth in the world with a staggering $US255 million as of July 2007. Australia’s foreign reserves are housed in the Reserve Bank, but the Howard Government’s raids on the bank have been staggeringly irresponsible, even extending to ripping out $1.1 billion last month despite the bank posting a $1.4 billion accounting loss for 2006-07.

Have a look at the earnings and distributions section of the 2006-07 Reserve Bank annual report and you’ll see two very interesting tables.

One shows that the bank has made about $25 billion in profits since 1995-96 and the other that the Howard Government has ripped out about $23 billion in dividends to boost its claimed budget surpluses. Despite this extraordinary boom of the past five years, Australia still has barely $30 billion in net foreign reserves.

Compare that with Norway which in 1996 established a national pension scheme to be funded by oil revenues. The founding CEO Nils Kjaer only quit last week and what an extraordinary record he has given that the pension fund is now one of the world’s biggest with $US328 billion in assets.

If the Howard Government had committed $10 billion a year to the Future Fund since 1996 – plus retained the budget in surplus – we’d be up there with the likes of Norway and South Korea in terms of sovereign wealth and have a fully funded public sector scheme as well.

Kim Beazley noted the powerful research of Saul Eslake in his farewell speech yesterday, quoting the ANZ chief economist’s figures that “parameter variations” since 2001 have improved the government’s budget position by a staggering $398 billion for the nine year period up until 2010-11. Can you believe this entire amount has been given away in tax cuts, hand outs and new spending.

Talk about squandering the boom and so much for great economic management. Our government has also flogged $65 billion in assets since 1996 but they’ve still got $50 billion in debt and almost $50 billion in unfunded super.

Stephen Mayne publishes the shareholder activism website www.maynereport.com

To see further debate on budget surpluses, watch Stephen Mayne, John Hewson, Eva Cox, and Sinclair Davidson on last night’s edition of Difference of Opinion.