Is the mining boom really finished?
Labor ministers rush to defend Australia’s future economic prospects after Martin Ferguson declares the resources boom “over”, sparking fierce debate.
LABOR frontbenchers have been forced to talk up Australia’s mining investment pipeline after Resources Minister Martin Ferguson said on radio he thought the “resources boom is over”, sparking fierce debate about whether this was actually the case.
Ferguson’s gaffe followed BHP Billiton‘s shock decision last week to shelve the Olympic Dam expansion in South Australia.
BHP announced on Wednesday it would halt the $30 billion expansion, prompting the controversial admission from Ferguson.
The mining giant’s announcement came after it reported a 35 per cent slide in net profit, which some commentators regarded as a sign that the peak of the boom may have passed.
Mr Ferguson later clarified his remarks, saying he meant to say he thought the prices for commodities had peaked.
Treasurer Wayne Swan, however, was out in Brisbane on Sunday highlighting the level of resource investments to come.
Since late 2007 resources investments had made up half of the $919 billion worth of investment in Australia, he said.
Of that, $260 billion was at an advanced stage.
“What we are about to see is a surge in exports which flows from investment,” Mr Swan told reporters.
Mr Swan said that despite Opposition Leader Tony Abbott’s talking down of the economy, there was a very healthy resource sector in Australia.
“I think Mr Abbott ought to apologise for all his talking down of our economy over the last couple of years.”
Mr Abbott and the coalition have been criticised for trying to link BHP Billiton’s decision to shelve its Olympic Dam plans to the mining and carbon taxes.
Liberal MP Bruce Billson said BHP had crafted its statement carefully so as not to blame the mining or carbon taxes because Labor had “form” going after people who were critical of the party.
Mr Billson said the South Australian Labor party had almost had a “hissy fit” about the decision and said BHP had to regain trust after the decision.
“What you see is this pattern of the critics of Labor become the targets of their venom.”
BHP had made the point time and again the tax environment was impacting their business, Mr Billson said.
“You didn’t need to be clairvoyant to hear what they were saying,” he said.
“They’ve been saying for months, new taxes, uncertainty with the government, the direction on where the economy is going more generally will have an impact on their investment decisions.
“The mining tax is affecting their balance sheet; they fund these projects off their balance sheet.”
The coalition has vowed to scrap the mining and carbon taxes, if elected.
Mr Billson would not say if he believed the expansion would go ahead if the coalition was in power and scrapped the taxes.
“That would be one less obstacle,” he said.
Trade Minister Craig Emerson also focused on the investment pipeline, conceding labour costs for construction had risen because of the low unemployment rate.
“With 100 per cent certainty the decision to postpone that project had nothing to do with the mining tax as Mr Abbott falsely asserted,” Dr Emerson said.
“When you get a huge demand for labour, and that’s what is happening in this country, with the unemployment rate coming down then you will see an increase in costs.”
Boom not over yet, says bank chief
Meanwhile, National Australia Bank chief executive Cameron Clyne says talk of the resource boom being over is premature.
Mr Clyne says he expects the massive pipeline of investment in Australia’s mining sector to go on, even though commodity prices would appear to have peaked and were coming off slightly.
“That was always to be expected,” Mr Clyne told guests at an Australia-Israel Chamber of Commerce lunch on Monday.
“But they are still actually quite high.”
Mr Clyne said there was still a significant amount of planned investment spending in the mining industry for the years ahead.
“There’s no suggestion that we have seen that people are going to stop that investment because they still see obviously the growth and the expansion, particularly in the Asian markets,” Mr Clyne said.
By Andrea Hayward and Jordan Chong with AAP
IMAGE: Prime Minister Julia Gillard, Martin Ferguson and Wayne Swan. (AAP Image/Alan Porritt)