The mining boom has brought prosperity to Australia but just to a select few parts. A fact shown by the annual State of the Regions report that claims that most of the country is missing out in the benefits of the profitable mining industry.
Based on this report the Australian Local Government Association has said that business confidence in non-mining industries may plunge as mining only makes up 20% of the economy with the remaining 80% being affected by high exchange rates and interest rates.
One side effect has been felt by the residential construction industry. As per the report, residential construction in the mining boom areas has suffered as the construction workforce and resources have been consumed by the mining industry. During the years between 2009 and 2011 there has been a drop of 27% in housing construction but a boom of 81% in non-residential construction.
Peter Brain, co author of the report said that immediate effects on production are depressing enough but the longer term effects are serious since investment in maintaining and updating capacity is being skipped. Product development and marketing was not taking place and skills were being lost.
For the nation to survive the mining boom it would have to become pro-active or face a ‘boom and bust’ economy which has been observed in the past. On the subject of the report the President of the Australian Local Government Association, Genia McCaffery felt that it set out a strong rationale for reform and effective federal leadership.