At some stage, either demand for our minerals and energy will slow or we'll simply run out. That's the thing about natural resources; they are finite. You only get to dig them out of the ground once. When this boom does end, you'd hate to think that as a nation we would be left with nothing more than a pile of worn-out, imported, flat-screen televisions, a lot of empty holes in the landscape and no way at all of earning a crust in the future. That's the daunting task facing our leaders; to maximise the value of those natural resources, not just for those of us around now, but for the generations that follow. And at that same time, maintain a diversified economy. Yesterday's long-expected restructuring from BlueScope Steel, which will shed a quarter of its workforce at Port Kembla and Western Port in Victoria, follows a similar announcement by OneSteel last week and proposed layoffs at Qantas and Westpac.

Those workers are not just units of labour as economics textbooks would have us believe, that can quickly transfer Western Australia's mines. They have families, commitments and specialised skills that make them far less mobile than machines. The simple explanation for what is happening right now is that the resources sector is squeezing the life out of our manufacturing industries. The enormous amount of money flowing into Australia - from mineral exports and in new capital to fund new projects - has pushed our dollar and our interest rates higher. Our currency moved higher than parity with the American dollar back in March and it has stubbornly remained at that level, even during the past few weeks of global financial turmoil. It's terrific for consumers. But it has eroded the competitive edge many of our manufacturers once enjoyed - particularly heavy industries like steel - which were built from years of technical innovation and productivity gains. And if our dollar continues to rise, particularly against an artificially low Chinese yuan, the pressure on our industry could reach breaking point.

Rather than address the root cause, however, there are now renewed calls from industry and some politicians for a return to the bad old days of trade protection. How about subsidies for the steel industry? At least, they argue, it would be better than paying unemployment benefits. Perhaps, they are right. But it's a little like offering a Band-Aid to a shark attack victim. And where do you stop with protection? These would be the same critics who scuttled the Henry resources tax (denying the nation income), who demand a quick return to a budget surplus - but who happily advocate increased spending (subsidies). Clearly, logic is a handicap in politics these days. There is a way forward for Australia but it requires bold leadership, a refusal to be held hostage to opinion polls and an end to the easy capitulation to vested interests. The fruits from the resources boom need to be harvested and invested for our future. And they could be invested in such a way as to take the pressure off our currency, thereby maintaining the competitiveness of our manufacturers. (Remember too, Henry proposed tax cuts to industry.)

Norway has done just that with its oil revenues. It has a sovereign wealth fund with accumulated assets of more than half a trillion dollars. All of it is invested offshore, thereby helping to stabilise the amount of cash flowing into the economy. That counteracts the pressure on its currency and, longer term, diversifies its earnings base. Other countries have done the same. Chile has a stabilisation fund while Alaska and the Canadian province of Alberta have similar funds. That's not to mention the Gulf States, which invest the proceeds of their oil revenues abroad. And countries such as Singapore and China have massive sovereign wealth funds that invest the proceeds of their trade surpluses. Yesterday's desperate restructuring at BlueScope - shutting its export division and halving its steel output - couldn't present a starker picture to that of its former owner, BHP Billiton, which this week will deliver a record $US22.1 billion ($21.2 billion) profit. Well managed and tightly controlled during the lean times, BHP is reaping the rewards of a once-in-a-lifetime boom.

Loading Its riches, down in no small part to its Pilbara iron deposits and the enormous coal seams of the Bowen Basin, will be divvied up and doled out to shareholders demanding a bigger slice of the bonanza. As with Rio Tinto, Australians still figure prominently on the share register. But the bulk of owners are foreign institutions. That is where the proceeds from the biggest resources boom in our history are headed.