Glenn Stevens, the Reserve Bank governor, warned Australians that the mining boom would not last forever and they need to save for the time when commodity prices will fall.
Thanks to the mining boom Australia is enjoying good trade and high living standards, but much of it is linked to the resource boom. The country needs to save for the future according to Stevens.
He was speaking at a Victoria University conference on the resources boom. Before he began his speech he said that he was not going to mention anything new and that he was going to risk sounding like a broken record. However he obviously felt that it was an important enough message to be repeated so often.
Mr Stevens said that the incomes from the resources boom needed to be saved rather than spent as seemed to be happening in most Australian households. As it was uncertain about just how long the boom would last despite the strong pace of increase in demand for resources from China and India.
The Australian terms of trade are at a historical high at 65% above the average of the 20th century level. Still the Reserve Bank of Australia is assuming that the terms of trade will drop over the next few years and this is the conservative end of the market forecasts. When it will happen is uncertain but that it will happen is sure.