75k mining jobs to disappear

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ANZ is making waves today with its latest major mining report. From Business Spectator:

As many as 75,000 resource-related jobs will be lost in the next couple of years as the industry’s $450 billion investment splurge on new capacity winds down, according to research by ANZ.

The toll on job numbers in the industry, as the switch from the job-intensive construction investment moves to the job-light operational phase, means the bank’s economists think there will be little improvement in the nation’s 5.8 per cent jobless rate.

ANZ senior economist corporate and commercial Justin Fabo said he expected 50,000 to 75,000 high-paid resources-related jobs to be shed across the economy during the next couple of years, creating a headwind to overall employment growth.

The job losses mean at least 150,000 new jobs will have to be created on an annual basis to maintain a stable unemployment rate.

NAB forecasts 100k in lost mining jobs and we at MB reckon both under estimate the multipliers given many of the tradies were leveraging up their gains and sticking them in investment properties. The report also canvasses another sad truth. From The Age:

Successive governments have failed to effectively tax Australia’s mining boom, with measures such as the controversial minerals resource rent tax providing little revenue, according to an analysis by ANZ economists.

”Despite expectations to the contrary, [resource rent taxes] have not been an important source of revenue during phase one and phase two of the mining boom and, therefore, will not be a large source of volatility in the coming phase,” the ANZ paper said. ”The MRRT only raised $200 million [or 5 per cent of the amount originally estimated] in 2012-13 and is estimated to raise just $100 million in net terms in 2013-14. The current government is attempting to remove the MRRT altogether.”

The petroleum resource rent tax, introduced in 1988, is forecast to raise just $2 billion. The Commonwealth’s total revenue base is $380 billion.

The mining tax, which the Abbott government pledged to abolish, is currently before the Senate.

”The third phase of the mining boom, the production phase, will bring significant benefits,” said the paper.

”Higher commodity export volumes will boost growth, while increased export revenue will improve Australia’s external accounts. Notwithstanding high rates of foreign ownership, the lift in profits will flow through to the economy via higher dividend payments, higher company taxation, and increased royalties.”

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And much lower income growth as the terms of trade keep falling. Mining boom phase three will be no fun, in part because we didn’t tax and save the first two appropriately, leaving us vulnerable to Budget cuts now.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.