So, the business media did get around to reporting yesterday’s awful BREE predictions for the mining bust, late in the evening at both (I’d asked earlier in the day why they had not covered the story).
The coverage itself tells you all you need to know.
At BS Stephen Batholomeusz does a creditable job:
A large part of that is due to the inability of resource company managements to control costs in the race to get resources into production and within a labour and equipment-constrained environment. The Australian dollar has played a part and the relative lack of flexibility and mobility within the economy hasn’t helped. China’s slowdown even as the supply of commodities swelled, of course, has also had a very significant impact.
The legacy of the resources investment boom will, of course, be greatly increased production and export revenues but that will probably not be sufficient to offset the loss of value from the lower prices.
But at the AFR, the story is as usual only a vehicle for vested interest whining:
Mining companies, which face a sharp drop in commodity prices, have told the government that high wage costs and increased red and green tape threaten new projects. Industry sources say the cost of environmental approvals on big projects are up to 5 per cent of the total value.
Australia has the world’s most expensive oil and gas workforce, a third more than US workers and almost double the global average, according to Hays and Oil and Gas Job Search analysis.
Minerals Council of Australia chief executive Mitch Hooke said complacency about mining, emerging protectionist sentiment and backsliding on economic reform threaten the industry and wider economy.
“Our country’s attractiveness as a place to do business in a highly globalised industry is slipping due to a combination of rising costs, declining productivity, increasing regulation and new taxes,” he said. “It is a wake-up call for our policymakers.”
…“It is a stark warning that Australia’s international competitiveness is at risk,” Australian Petroleum Production and Exploration Association chief executive David Byers said.
“In APPEA’s view, one of the key causes is the intrusive and burdensome regulatory environment that contributes to rising costs and uncertainty. Reduced exploration expenditure is a concerning lead indicator.”
Australia faces an economic Waterloo and the best the AFR can do is cheap lobby group palaver.
Don’t get me wrong, I’m not taking a cheap shot here. The business MSM is an integral part of how we got into this developing mess in the first place. Its total failure to hold businesses to account, its hostility to any policy measure aimed at controlling the boom over the past decade, its habit of recycling the ludicrously bullish commodity boom rhetoric of the government, its failure to promote ideas that would prepare the economy for what comes after is, in short, a major cause of where we are today.
And where is that? Here:
Please bear a few things in mind with this chart. It makes assumptions about GDP growth in the years ahead and contains some estimates, not least being my attempt to convert BREE’s investment stock pipeline into a flow of spending (basically I just halved stock to equal flow based upon the history of the relationship). It is intended as a guide only.
Moreover, this is not fixed. If the dollar were to fall significantly, new projects will come back into focus and the down slope will ease. But that’s the point, really.
Why the Hell aren’t we doing everything – and I mean everything – in our power to get the dollar down as far and as quickly as possible?
