Too Much Luck: The Mining Boom and Australia's Future
Author: Paul Cleary
Is it possible for anyone to have too much luck? You wouldn't think so, yet Paul Cleary believes that while Australia is often described as the lucky country, what we have is dumb luck, too much luck, more than we know what to do with.
"Too Much Luck" is the title of Paul Cleary's latest book, and in it he reflects on the Mining Boom and Australia's Future. Paul has been reporting on politics and economics for more than 20 years. He's a senior writer with the Australian, and has been an advisor to the East Timor government.
Excerpt below...
Resource prices are currently looking to pull back
Interesting also is that Treasury secretary Ken Henry gave several speeches in 2008 and 2009 about the so-called ‘dutch disease’ – the economic phenomenon where massive growth in the resources sector hollows out and depletes the rest of the economy. This would seem to tie in with the oft commented "two-tier" economy blurbs of late?
Author: Paul Cleary
Is it possible for anyone to have too much luck? You wouldn't think so, yet Paul Cleary believes that while Australia is often described as the lucky country, what we have is dumb luck, too much luck, more than we know what to do with.
"Too Much Luck" is the title of Paul Cleary's latest book, and in it he reflects on the Mining Boom and Australia's Future. Paul has been reporting on politics and economics for more than 20 years. He's a senior writer with the Australian, and has been an advisor to the East Timor government.
Excerpt below...
Chile, a less affluent resource-rich country, has shown just how inept our politicians and economic experts really are. Several years ago Chile put in place a mechanism to ensure that its politicians didn’t blow the proceeds of the country’s lucrative copper mines. Any revenue above a set threshold went straight into tightly controlled sovereign funds. When the GFC came along, Chile was able to use the fund to deliver an even bigger stimulus to its economy than Australia did, without racking up a single peso of debt. Other resource-rich countries have similar policies. Norway, a country of only four million people, has saved more than $450 billion in just fifteen years. When its oil is gone, Norway will be able to live off the interest, thereby maintaining its enviable standard of living into the future. There are many other examples. The essential idea is to turn non-renewable resources into a financial asset that will last forever….
The Australian economy is now sinking hundreds of billions of dollars into expanding mineral and energy production. Our state and federal politicians have become so bedazzled by the prospect of even greater mineral riches that they are eagerly facilitating a resources stampede while giving less regard to long-term ecological and financial consequences. Increasingly, resource development in Australia involves weak and inept governments up against muscular multinationals that are prepared to go as far as removing political leaders to secure their interests. Such were the dynamics of the mining companies ‘ spectacular defeat of the super-profits tax. Without a fairer tax, Australia will continue traveling at breakneck speed towards the bottom of the quarry, a journey that will wreak havoc on the non-resource sector and potentially leave many people far worse off. As the resource boom accelerates, it will drive the dollar sky-high, forcing up the cost of doing business for everybody. Industries such as tourism and education – industries that, unlike mining, involve many jobs – will fade away. But what happens if commodity prices suddenly collapse, as they did with the GFC in 2008; or worse, when the resources run out?…. without a resources fund, we are stealing from future generations. Without such a policy, this mining boom amounts to theft on a scale never before seen in this country’s history.
Resource prices are currently looking to pull back
Interesting also is that Treasury secretary Ken Henry gave several speeches in 2008 and 2009 about the so-called ‘dutch disease’ – the economic phenomenon where massive growth in the resources sector hollows out and depletes the rest of the economy. This would seem to tie in with the oft commented "two-tier" economy blurbs of late?