AUSTRALIANS need to put the relevance of the mining industry into perspective and diversify for the future, says Federal Minister for Innovation, Industry, Science and Research Kim Carr.
Highlighting that the mining industry contributes 8 per cent of GDP and only 1.4 per cent of employment, Carr says a view of the industry as an ‘insatiable beast’ is uni-dimensional.
“According to this school of thought, the mining sector is so central to our livelihoods that we should sacrifice everything to it,” he says.
“We’ll rip our scarce capital and labour from the so called ‘inefficient’ industries, and somehow thrive as little more than the world’s quarry. Mining is growing fast, but nothing lasts forever, no matter how welcome it is today. It would be bold and naive to think that the income we currently enjoy from the resources sector will continue unabated.”
Carr says one of the reasons why Australia has weathered the global financial crisis so well is its economic diversity, and we cannot afford an unbalanced economy.
“What we need to do is ensure that not just the mining sector – but all sectors of our economy – are in tip top shape,” he says.
“Contrary to the knockers, this does not mean propping up ‘inefficient’ industries, it does not mean interfering with markets, and it certainly does not mean artificially restricting the free flow of resources within the economy.
“But it does involve having a vision of what we want the Australian economy to look like in 10, 20 and 30 years time. And it means taking the necessary, but difficult decisions, to make this happen.”
He highlights that manufacturing is critical to Australia’s future, because the associated skills will be difficult to recover if lost.
“Mining and manufacturing are complementary – the ‘either or’ approach does both sectors a disservice and ignores the complex and inter-related nature of our modern economy,” he says.
“By having a manufacturing sector we avoid simply becoming the world’s quarry, we add value to the resources we mine, we create high-tech and high-wage jobs and we attract the investment in research and development that only comes from having a manufacturing capacity.”
Carr’s views are echoed by economist and QIC chief Doug McTaggart.
“Since the mining boom, net exports have deteriorated, while import growth has accelerated,” he says.
“While dollar values due to coal and iron ore have increased, volumes of net exports have slowed. A small portion has increased dramatically at the expense of other exports.”
McTaggart recommends a resource tax that would be put into a sovereign pool to be invested offshore, pushing down the value of the Aussie dollar and then brought back into the country once the dollar stabilises.
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