The meteoric rise of the Australian economy

Prof Quentin Grafton: "It’s been a phenomenal time in the context of the resources and energy sector but also for the Australian economy as a whole. So we’re now into the 22nd year of continuous growth, which will be surprising for many other developed economies given what happened in the global financial crisis in particular but 22 years of economic growth has in part been supported by what’s been called the millennium mining boom and so what has happened, prices started to rise and they started to rise quite dramatically from about 2002/2003. It depends on the commodity but certainly, by the end of 2003/early 2004, prices were getting substantially higher than they had been from historic lows and in fact became historic highs and prices peaked in 2011. Along the way, because of the very high prices, mining companies started to make very large investments in terms of getting their output out of the ground, out of their mines, extracting it and not just mines, not just minerals but also in terms of extraction of let’s say gas.  That generated massive investment. So we’re talking about close to 400 billion Australian dollars and that’s more than a US dollar at the moment or it was last week. It’s about the same. Let’s say it’s on par, about 400 billion dollars’ worth of investment in the last decade and that’s been in a range of sectors but primarily in iron or coal and liquefied natural gas.  Those investments have generated employment. So employment has basically tripled over the decade in the mining sector and it’s also generated a whole range of indirect employment in terms of construction. They’re not directly involved with mining but they’re involved with construction and infrastructure in particular. It’s also contributed to very substantial gains in real income.  So income in Australia basically increased by about 40%. It depends on exactly where you are and what sort of job you’re in but it’s increased by about 40% over that decade period, which is phenomenal growth. So it’s been it’s has been a boom so to speak, in terms of the sector and then things have started to change in the recent past. So I alluded to the fact that prices peaked and they did peak in 2011 and prices have come off.  Those peaks are still at very high levels compared to where they were in 2002 but nevertheless off those peaks and there’s a range of challenges that the industry is currently facing in the context of where investment might be going, where employment might be going, where prices might be going, challenges from just to reemphasise, challenges from peak levels which we were at in 2011."

Categories: Coal in Australia, Economy, Global Markets, Jobs, Resources & Economy
Author: Prof. Quentin Grafton
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