RESOURCE activities of the past decade have underpinned significant improvements to Australia’s standard of living, according to a new report on the impact of the ‘mining boom’ by the Reserve Bank of Australia.
In its research discussion paper, The Effect of the Mining Boom on the Australian Economy, the Reserve Bank compared the economic outcomes of Australia’s mining investment surge against projected benefits had the mining boom not occurred.
“The world price of Australia’s mining exports has more than tripled over the past decade, while investment spending by the mining sector increased from 2% of GDP to over 8%,” the report read.
“This ‘mining boom’ represents one of the largest shocks to hit the Australian economy in generations.”
The research, which circulated primarily around the overarching impact of rising commodity prices, found that income, wages and employment rates had increased as a result of resource investment.
“By 2013, we estimate that the mining boom had raised real per capita household disposable income by 13%, real wages by 6% and lowered the unemployment rate by about 1.25%,” the report said.
The increases of income combined with the improved exchange rate associated with the mining boom led to higher purchases of household goods, food and communications.
“The combination of the substitution and income effects mean that motor vehicle purchases may have been 30% higher as a result of the mining boom, and durables 25% higher,” the report said.
Additionally, those who had bought into mining shares, including through superannuation funds, were said to have benefited most from the mining boom.
However, the report also said that other industries had experienced a slight downturn coinciding with the ramp-up of resource investment from 2002.
“The combination of changes in income, production and relative prices [associated with the mining boom] has meant large changes in the composition of economic activity,” the report said.
“While mining, construction and importing industries have boomed, agriculture, manufacturing and other trade-exposed services have declined relative to their expected paths in the absence of the boom.”
Likewise, renters also enjoyed less gain from the mining boom.
“Despite strong demand, the supply of housing contracted [as a result of the mining boom], compounding the downward pressure on vacancies and upward pressure on rents,” the report read.
“We estimate that, without the mining boom, the vacancy rate would barely have fallen below 2% during 2006/07 and rents would have roughly kept pace with inflation.”
To view the report in full, click here.
