Retired MP Tony Windsor says Howard-era mismanagement of the mining boom will return to haunt Prime Minister Tony Abbott.
The former key federal independent has backed a union report's calls for a sovereign wealth fund to help share the benefits of the resources industry among more Australians.
Mr Windsor launched the report, commissioned by the Construction, Forestry, Mining and Energy Union, at an event in Sydney on Tuesday.
The report found that although the resources boom had helped shelter Australia from the worst of the global financial crisis, governments had "squandered" a chance to efficiently share its profits.
It argued Norway had done a better job of maximising the permanent gains from oil and gas extraction in the North Sea.
The report called for Australia to follow the Norwegian model and establish an Australia Development Fund to use some of the proceeds of resources development for long-term projects.
Mr Windsor said it was a sensible approach.
"During the Howard years we really didn't take advantage of the boom, we created a lot of middle-class welfare," Mr Howard said.
"I think a lot of people are aware now that you can't just go through boom cycles, issue currency to the community, and then when the bust comes - and Abbott's going to face this exact problem ... it's very difficult to take it back.
"The concept of a fund is that it does take advantage of the good times and smooth out the ripples."
The report found that the thriving resources sector had boosted jobs but the fly-in fly-out (FIFO) nature of much of the employment did not help mining towns.
It did however increase cost-of-living pressures for the towns' permanent communities.
And the share of income going to employee compensation has declined over the past 20 years, the report found, from 30 per cent to 20 per cent.
CFMEU president Tony Maher said the profits from Australia's mining boom had largely been exported.
"Too much has gone into the pockets of shareholders and management, overwhelmingly based overseas, and too little to the Australian community that owns the resources," he said.