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The Forum > Article Comments > Was the mining boom good for you? > Comments

Was the mining boom good for you? : Comments

By David Richardson, published 19/6/2009

The mining boom bonanza barely spread beyond the mining industry but the negative implications of the boom were felt widely.

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The boom also had dire outcomes for smaller communities. The mining companies lured tradesmen from all fields with extraordinarily high pay packages. This measure forced firms outside the mines to inflate wages in an attempt to retain and, or, attract tradesmen to keep the business viable.

Many small businesses have folded being unable to either pay the inflated wages or attract enough tradesmen to keep the business running.

It was a boom for some but a bust for many outside the mining sector.
Posted by Sparkyq, Friday, 19 June 2009 9:30:30 AM
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The Australia Institute should look on Australia as one big household. If we have a big strong breadwinner, we have a chance of having a reasonable standard of living. If we donít, then poverty is the outlook. Where did Kevin Rudd get the money to avert a recession, the mining boom. We are all shareholders through the tax system on companies of companies. If miners go well we all go well.

This used to be recognized universally, and a Miners Right, giving a prospector almost unlimited access to Crown land, recognized their importance. The mining boom, by bringing dollars into circulation, made the economy liquid. There was cash around. It was spent. How it was spent was mostly up to you.

The stimulus package that has largely insulated Australia from the worst of the world recession, is funded in large part by our mining sector, and the blue ribbon credit rating it gives us. We cannot eat rocks, or trees, or grass. We as a higher form of life, must eat expensive farmed food. We can and do eat fish, but it has to be caught, by a primary producer.

Of course we all benefited from the mining boom. These miners have made it possible to ride out a bitter recession, and whingeing about foreign ownership is not the right thing to do. The bottom line is yes, we did all benefit, but not equally. That is the challenge we must now face
Posted by Peter the Believer, Friday, 19 June 2009 11:22:02 AM
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During the "mining boom" we had private debt blow out to 30 times historical whilst off-shoring industry, privatising infrastructure and converting 30% of GDP into financial (farcical) tiddlywinks.
I was looking forward to the benefits of my skills being in demand and perhaps my wages could have risen to compensate for the 300% increase in house prices. Nope: they increased immigration due to "skills shortage" and swamped the market. This kept house prices high and skilled wages low.
Seems the free market is only meant to benefit the few at the expense of the many...just like most Liberal policy. You can view Rudds cash splash as a belated attempt to re-invigorate the sectors sucked dry by the oligarch party..
Funds are scarce so interest rates (the rental price of money) should be high. Why aren't they? Market distortion. If the market were to price money correctly we would have massive foreclosures, bank failures and house land price decline like has happened in US and UK. So will they allow this when the fools in charge believe "house inflation Good, all other inflation Bad"...or will they let inflation run out? We can't have both at once now the bubble has burst.
High inflation will penalise savers, workers and pensioners whilst continuing to benefit bankers, property developers and large asset holders.
Guess what: High inflation coming, the price of realistic interest rates may be too much for incumbents.
Australia could be rich, free and sustainable. Instead we've followed America into being broke, stratified and over-exploited. The Greens need some economic/industry clout to pose a significant threat to the Banker-fantasy league currently in both parties.
Posted by Ozandy, Friday, 19 June 2009 11:30:23 AM
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Like the author I also wondered where the benefits of the mining boom went. Although there were undoubted benefits in a lot of jobs created in one sector at higher pay - I disagree on that point - the adverse effects he is talking about amount to the classic resources curse. A country with resources does not seem to do mush more than dig them up and export them. Because its the easy thing to do that activity, one way or another - high exchange rate, consuming available capital - crowds out other activities. Finland is a classic case of the opposite. No resources, meant it had to find other ways to make a living and have done it so successfully that the Finns have one the highest standard of living per capita.
I'm not sure what can be done about this but Australia is lucky in that it has avoided the worst of the resources curse - civil war. Zaire is rich in diamonds but diamonds are small and portable and so ideal for financing wars, if a warlord or two holds a diamond producing area. There are diamonds in Australia, in small quantitites but, thankfully, no war lords.
Posted by Curmudgeon, Friday, 19 June 2009 2:21:57 PM
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Those sensible enough to know the boom would not last have gained greatly from the Mining boom. Those with no self control and addicted to debt were the big losers. Many unskilled workers were able to get well paid jobs where before they were close to unemployable. The mining boom has also seen many skilled workers from overseas settle in Australia. This is healthy immigration where the workers have integrated and added to our society unlike many who move to ghettos and milk the Government and live on the proceeds of crime. Mr Rudd has managed to give away 10 years or so of royalties in no time at all. Don't blame the Mining Industry for the wanton waste of State Labour and now Federal Governments.Despite the downturn we should be in a lot healthier position.
Posted by runner, Friday, 19 June 2009 5:22:21 PM
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The mining boom like all industries is in recession. The demand for minerals has dropped, but still the mines are making a profit, and the share prices are creeping up again.

The boom contributed to the gov coffers, as did all other businesses. The boom was mostly due to two factors, one the increase in demand for minerals, and also the breaking of the strangle hold of labor IR laws that made mining unprofitable.

This is why other countries (south africa etc) had their booms long before 1990, but Aus had it only after the fall of the labor gov.
Posted by Democritus, Saturday, 20 June 2009 6:50:15 AM
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