People have been wringing their hands and crying about the end of the mining boom. But it’s not all doom and gloom.
That’s because we are really only talking about the first phase of the mining boom being over. That’s the phase which has to do with mining construction. The ensuing export boom is just beginning. That’s why Australia’s GDP edged up to 3.1%.
The thing to remember about the mining boom is that most of the negative impacts of winding down the construction phase have already worked their way through the Australian economy. We have huge positives to look forward to.
Some of the directly affected areas, such as Karratha and Mackay, were the first to feel the end of the construction boom. But what’s happening now is that some of the bigger cities have become the beneficiaries of the export boom. This is because of all the embedded services they provide, such as maintenance, maritime services and financial services.
In a sense, the golden baton of the mining boom is being passed on to the wider community.
What’s not widely appreciated is that the boom has induced faster population growth and faster economic growth in a one-off expansion of the Australian economy. Australia has been through only five major trade episodes since World War 2. This is the biggest one ever – in the whole of the country’s history – not just post war. And the broader economic benefits for growth in GDP and population growth far outweigh the negative localised impacts.
Even when we look at some of those local places that were hardest hit by the end of the construction boom, the story is not always as bad as it seems. For example, Gladstone, which was definitely oversold, has some very good fundamentals that place it in a strong position for the future. It is arguably one of the best ports around the world, and rather than being just a destination for construction workers, it has a permanent population which can service the mining industry.
Darwin is another example, where an increase in tourist numbers has outweighed the decline in Fly In Fly Out mining workers, so there has been no reduction in passenger numbers through Darwin airport. As a result of the mining boom, six new hotels were constructed – all of which will support growth in the tourism industry.
A Reserve Bank study claims that the beneficial impacts of the boom will persist until the early 2020s.
So, yes, it is the end of the mining construction boom, but that’s not something we should be getting too worked up about. We have to take our attention away from the mining industry as the country’s salvation and focus on our services sector, which will underpin future economic expansion.
The services sector – tourism, education, health and professional services – was growing all the way through the mining boom, and growth has been even faster since the construction boom has ended. We all watched images on TV showing the big dredges and the large mines, and perhaps thought: ‘that’s where the jobs are being created’. But the big employment numbers have never been in mining, which only accounts for a minuscule 0.4% of the workforce.
About the author:
Brian Haratsis is MacroPlan’s Founder and Executive Chairman. Brian is an economist and future strategist with over 30 years experience as an advisor to governments and major corporate clients throughout Australia and New Zealand. For more information or to discuss your property research requirements, please contact National Marketing Manager, Amy Williams on 02 9221 5211 or firstname.lastname@example.org.