The Essential Report Archive Read the latest report

Keeping Our Eye On The Boom

24 Aug 2012

Deep in the weeds of the 24-hour dust-up over whether the mining boom is over—on the very day that BHP reported a $15 billion profit— lurks a more obvious strategy on the part of the mining companies: a determination to build up the specter of a threat to the boom if “costs” are not controlled—“costs” being workers’ wages—and to take absolutely no responsibility for the blow-back from the boom.

Some of this is subtle, some not so subtle. The boom is far from bust, as Paul Cleary pointed out in The Australian:

The projects that mining companies have put on hold are completely overshadowed by the $260 billion in investment already approved by company boards and government authorities that is being poured into mammoth mining and energy projects across the country.


Even if commodity prices fall by 50 per cent, these increased volumes will generate increased flows of income into Australia, keeping the dollar strong while driving far-reaching structural change in our economy. This means the mining boom can be expected to deliver benefits and challenges for all Australians for some time to come. [emphasis added]

The mining barons, themselves, swore up and down yesterday that, no, the boom wasn’t over. But, the Fin gives a little insight into where they are going:

At The Australian Financial Review and Macquarie Future Forum in Perth, resources chiefs were confident that Chinese demand for commodities will grow in the longer term, despite a slowdown that has seen iron ore and coking coal prices fall to four-year lows.

However, they warned Australia had become a high-cost place to develop projects, and needed to improve its international competitiveness through reforms to taxation, industrial relations and environmental approvals. [emphasis added]

Aha. “Reforms” in taxation and industrial relations are code words for the Coalition’s agenda: repeal the resources tax and attack the system of bargaining that protects wages and benefits that makes Australia a decent society. In a decent society, leaders would embrace a once-in-a-lifetime mining boom to invest some of the profits in infrastructure, schools and other in life-changing, society-altering projects. Nope, the mining barons make clear, we’re just not in to that.

Note that “high cost” never refers to the compensation of the CEOs of the mining companies, or the staggering wealth of the owners of the companies like Gina Reinhart, the richest woman in the world. “High cost” translates into “take it out of the hide of society and the working person”.

The mining barons view can be summed up thus:

We don’t care how many people are hurt by the rising Australian dollar. That’s the “free market”.

We will fight tooth and nail against resources taxes because, well, the “free market” cannot be messed with.

We truly don’t care  what Australia looks like in 20, 30 or 40 years.