Thursday, 8 August 2013

Post mining investment boom needs new acronym: PMIB

There's a headline on the Sydney Morning Herald website today that just doesn't make sense: 'NSW to lead in post-mining boom', it says. The newspaper's subeditors aren't alone in being wrong on this point, of course. On the 7.30 program last night during her interview with the prime minister, Kevin Rudd, journalist Leigh Sales made the same mistake by pointing to a "post-mining boom" that she somehow linked to a "slowdown" in China to suggest that Australia's economy was due for a readjustment - and what was the government going to do about it?

Rudd quickly pointed out to Sales - correctly - that what is occurring in the mining industry is a slowdown in the amount of construction of capital works that has fuelled the shift of thousands of workers to fly-in-fly-out jobs in the outback. Mining itself, as Rudd also pointed out, is doing great guns. With all the new capacity that is coming online in Australia's vast hinterland added to continued strong demand for commodities like coal and iron ore - the raw materials for still-massive construction projects in places like China and India - Australia is set to enjoy a positive balance of trade going forward (both coal and iron ore are required to manufacture steel).

So the short conclusion is that we need a new acronym, something like PMIB ("post mining investment boom").

As for China, it's true that China's leaders are trying to rein in growth there in order to ensure that housing is not completely unaffordable for the millions of people who have moved to the country's cities over the past decades - and who will continue to make their homes there going down the track - but growth of seven percent per annum is still very strong indeed.

In short, there is no "post-mining boom" period to lament, now, in 2013 and going into 2014 and ensuing years. What we are now entering is a period where jobs in Australia dedicated to constructing mining infrastructure are tapering off; now it is the production phase we are entering. We see figures that allow us to understand this kind of thing all the time; the mooted casino for Townsville announced recently, for example, was announced in such terms: X number of jobs in the short term and Y number of jobs on a permanent basis. Let's get our terms right. It's so irritating to hear people like Sales - who otherwise does a competent job - muffing her lines so badly out of mere ignorance.

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