Given the number of visiting delegations that troop into the Australian parliament to watch the occasionally bruising debate, it’s perhaps fortunate that there were a distinct lack of Norwegians present when Joe Hockey announced the demise of the mining tax on Tuesday.

Anyone involved in policy formation in the Nordic country would probably have been baffled and even dismayed that an advanced democracy such as Australia could’ve strayed so far from Norway’s stellar example on how to manage the dumb fortune of a resources boom.

Norway’s government Pension Fund Global was created in 1990 to make the most of the windfall of striking oil in the North Sea. Companies looking to extract Norwegian oil pay handsomely for the privilege.

The Norwegian government sums up the fund with the rather lengthy fortune cookie-like phrase “One day the oil will run out, but the return on the fund will continue to benefit the Norwegian population.”

The bulging sovereign wealth fund, managed by the Norwegian government, is set to top $1trn within this decade. At the end of 2013, its value stood at 5.2trn kroner – that’s $903.4bn.

With the money invested more than 8,000 businesses and properties last year, the fund currently owns 1% of all the world’s stocks. The fund managers recently purchased a slab of London’s ritzy west end, including Savile Row, famed for its sharp suits and the former office of the record label Apple – the rooftop venue for the Beatles’ last live performance.

The fund’s average annual return has been 5.7%. Last year was a bumper one, with the money pot swelling by 15%.

Norway’s oil piggy bank is worth more than the GDP of Switzerland. More even than the US’ gargantuan annual military budget. In effect, Norway is a country of five million trustifarians – with each person theoretically being a millionaire (in kroner, that is).

Facebook Twitter Pinterest The Statfjord A-oil platform in the North Sea off the Norwegian coast. Photograph: Oyvind Hagen/EPA

Such largesse invariably raises the challenge of how to spend the money. The government is limited to spending just 4% of the fund each year, with the rest hoarded for future disasters that may befall the Scandinavian country.

Regardless, Norway’s publicly funded safety net is lavishly embroidered. Parental leave lasts 46 weeks at 100% of pay. Almost every child has access to childcare. Farmers are subsidised to the extent that they can keep cows in heated barns in the Arctic.

Despite the relatively robust health of the Australian economy, there is no such opportunity for Scrooge McDuck behaviour, largely because of the botched way Australia has managed its once in a generation mining boom.

In scrapping the mining tax, treasurer Joe Hockey called it a “testament to a failed Labor government, failed economic policy, failed taxation policy and a failed treasurer.” Tony Abbott called it a “stupid” tax.

In many respects, Hockey and Abbott are onto something. In Norway, companies drilling for North Sea oil pay a 78% tax rate on income, compared with a corporate tax rate of 28%.

By contrast, the much-derided Minerals Resource Rent Tax placed a 22.5% “super profits” tax on coal and iron ore producers.

But the nature of the system meant that it raised very little money. Indeed, last financial year it raised nothing at all and was projected to bring in just $450m this year.

This kind of flaw isn’t that surprising when, uniquely among businesses, the mining companies were allowed to write their own tax code by a callow Labor government terrified of marauding mining magnates on the back of Utes.

Where Hockey is on less firm ground is when he states the scrapping of the mining tax is a “damn good deal.”

When you consider the Norwegian example, it seems farcical that parliament has spent the week squabbling over associated superannuation and childcare benefits when the obvious source of revenue was turned down for short-term political expediency and then abandoned entirely.

This wasted opportunity extends to other areas. The outcry over changes to university fees, or welfare or payments to see the GP would surely be rendered unnecessary if the previous government had crafted a proper mining tax and spent it wisely.

It’s also to the detriment of Australia’s national intelligence that the idea of the mining tax as a jobs and growth-destroying handicap was given credence, all while being derided for raising no money.

Norway’s GDP is set to grow by 2.7% this year, while Australia’s will grow by 2.5%. Both countries rode through the global financial crisis relatively unscathed. Unemployment and inflation has remained low in both countries, although they both have come under recent pressure in Australia and Norway, respectively.

These results were similar even though Norway taxes its oil firms at 78% and Australia’s MRRT was 22.5%. There was no stampede of resource investment away from Norway due to its high tax rate, and it managed to insulate itself from any recession for coming generations to boot.

Like Australia, Norway had an incoming conservative government last year. However, the language of the two governments appears to be from different planets, let alone ideologies.

“I would like to look into the budget to see if there are enough investments in education, research and infrastructure. And also the framework for small and medium sized enterprises,” said Jan Tore Sanner, finance spokesman for the Norwegian Conservatives after the party’s election victory.

“We really need to have strong investments not only in the petroleum industry but also in the other sectors of the economy.”

This could’ve been the outcome for Australia, had there not been such a catastrophic failure in long-term thinking and such timidity in facing up to rent-seeking self interest.