Report Refutes Publicised Benefits from Australia’s Mining Boom

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A new report belied federal authorities' perennial harping that the spirited rise of the resources sector keeps the local economy afloat amidst global declines and pressures from within.

On the contrary, the Australia Institute ( AI ) said on Thursday that much of the benefits trumpeted by the Australian government as directly caused by mining activities in the country were actually reaped by foreign entities, which operate and own major resources players.

Billions of dollars of profits were actually shipped out of the country in the same manner that locally produced commodity products were exported in staggering volumes and pace.

Worst, mining shipments actually fuelled the consistent rise of the Australian dollar, which according to the AI report titled 'Mining the truth: The rhetoric and reality of the commodities' only managed to apply pressures on the country's manufacturing sector that also employs a big chunk of the local workforce.

"Much has been said about the changing face of the mining industry, where the effects of the boom have been both substantial and positive ... but until very recently there has been far less discussion of the impact of the mining boom on the rest of the economy, including those areas which have suffered as a result," the AI report revealed.

The report also claimed that so-called spin doctors of key miners were successful in making it appear that the industry generates record number of jobs, contributes huge amount to the federal coffers, kicks up the country's commodity exports and raises the overall value of market shares.

AI said that many of these claims were actually backed by federal pronouncements but sufficient data to support the positive impacts being delivered by mining companies appeared to inconsistent with available public documents.

Basing on figures provided by the Australian Bureau of Statistics (ABS), only 1.9 percent of Australian workers were directly employed by mining companies, which was very far from the 16 percent estimates gathered in a survey.

Also, the ABS has reported that in fiscal 2009-2010 alone, miners collected pre-tax profits of more than $51 billion, 83 percent of which were remitted back to parent companies of these operators.

"If these profits were distributed evenly across Australian households the dividend cheque received by each household would come to more than $5000," the ABS said.

In the end, only those who are directly connected to mining activities which can be declared as beneficiaries of the resources boom while many sectors such as education, property, manufacturing and tourism suffer due to the abnormal growth of mining exports that push up the dollar.

The AI report also noted that ordinary Australians were poised to enjoy some $200 billion revenues over the next 10 years had the resource super profits tax (RSPT) introduced last year by former Prime Minister Kevin pushed through.

As it turned out, Mr Rudd was outmanoeuvred by the giant mining firms, which resulted to his exit and the RSPT's demise.

 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Commodities

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