Rapid growth in China and the consequential demand for mineral resources has been the catalyst for the biggest mining boom in Australia’s history. The mining industry contributes significantly to our regional and state economies. It is estimated that mining and minerals processing has an employment multiplier effect of 4.5, which is fantastic for regional employment and business growth.
However it is not only people and businesses, the state government has financially benefited through royalties and state taxes to a windfall greater than $600 million dollars in 2005/06. See the major mineral deposits in NSW on the Department of Primary Industries website.
From a regional perspective mining has been welcomed, although it does place considerable competition on our resources, including recruitment of personnel and water security. However looking at the positive side, the boom has provided some much needed cash back into our local economies, which are still suffering from the drought, and in some instances mining has provided some vital off farm income.
Mining due to the demand from China and the resultant high commodity price has proven to be big business for the government why else would the NSW Premier risk a political outfall to open the Gold Mine at Lake Cowal, near West Wyalong, when the development had been plagued by environmental and social concerns, because it and other operations have contributed an extra 100 million dollars into the NSW State revenue from 2005 to 2006.
And the boom doesn’t look like it is stopping there. Mining exploration expenditure has increased 5 per cent to around $480 million in the June 2007 quarter. This estimate is now 37.4 per cent higher than the June 2006 quarter estimateaccording to ABS data, 8412.0 Mineral and Petroleum Exploration, Australia June 2007.
Tom Murphy of the Charles Strut University/Western Research Institute agrees that there is evidence of the boom continuing in WA, Queensland and regional NSW: “…the continued growth of China will drive the demand for both Australian minerals and fossil fuel resources,” Tom stated.
When asked about future implications that we should be aware of, Tom explained an historical economic observation known as The Dutch Disease, which will pose a challenge for Australia’s economic policy makers.
“ While the boom is providing strong economic growth and employment it also has the side effect of the so called Dutch Disease. Specifically mining has pushed up the Australian dollar and increased pressure on already tight skilled labour markets.
This makes it more difficult for other Australian industries that trade on world markets to compete. Traded industries include those that predominately provide import substitutes like cars and white goods as well as those that predominately export trade like agriculture,” Tom explained. “In other words mining can crowd out some other industries.”
So while mining is providing some local and relative short term buoyancy we will need from our governments and policy makers some long term investments with their mining revenue windfall to maintain the long term sustainability and growth of other regional industries.
|
