In what is becoming a regular pattern, Fairfax’s Ross Gittins has today lamented the Dutch Disease caused by the mining boom, which has helped destroy the non-mining tradable economy:
This, among many other instances, is the story of the resources boom, which our leaders applauded all the way and made little effort to control.
Think of all the jobs created. The main price we paid was that the dollar, caused by the boom to stay way too high for too long, prompted a slab of our manufacturing sector to give up the struggle…
With mining projects, too little is done to remind people that almost all the promised jobs are for the construction, not running the thing. As soon as the project’s completed, the construction workers go back where they came from – often overseas – leaving the nearby towns as flat as a tack…
To be fair to Gittins, he does make a lot of excellent points in the article, which focuses on politicians selling the empty promises of ‘jobs and growth’.
That said, I do find it frustrating that Ross Gittins fails to acknowledge that he too was once a card-carrying cheerleader of the mining boom who frequently played-down concerns about Dutch Disease.
For example, here’s Gittins writing in The SMH in October 2009:
We don’t have Dutch disease because that describes a situation where the resources boom soon subsides, leaving the economy marooned. In our case, the boom seems likely to run for decades…
Those industries that can’t stay profitable under the high exchange rate and interest rates will contract and thereby release workers and capital to be taken up by the ever-expanding mining sector.
From the perspective of the overall economy, that won’t be bad, it will be good. Why? Because the economy will be shifting to the production of a more valuable and profitable combination of goods and services.
And here’s Gittins again in October 2012:
Coal and iron ore prices may be falling, but don’t imagine they’ll return to anything like what they were…
The econocrats now expect that, by 2019, they will have collapsed to a mere 50 per cent above that 100-year average. Nothing to show for it? This means we’ll remain wealthier than we were (our exports will continue buying far more on world markets than they used to).
All this ignores a further benefit from the resources boom that, though it has already started, is largely still to come: vastly increased quantities of coal, iron ore and natural gas for export. This, too, adds to our wealth.
Ross Gittins is well justified to question government policy pertaining to the mining sector, and whether these policies are delivering maximum benefits to the resident population.
But Gittins should also admit that he, just like the government, was one of the cheerleaders of the very destruction he now laments.
