Just how important is the mining sector to Australia? Sure, we all know that Australia is in the midst of a mining boom but does it deserve to be considered the darling of the economy?
New figures from the Australian Bureau of Statistics (ABS) show that in the year to February 2011 305,700 jobs were created yet only 27,300 of those were in the mining industry. This is in contrast to health and social assistance which added 91,500 extra workers. Retail employed an extra 49,300 people and transport and postal services added 34,000. As of last month mining employed 1.8 per cent of the workforce, or just 205,100 workers.
Other recent data from the ABS reveals that despite China’s insatiable thirst for our resources Australia still has a current account deficit of $34.7 billion. Why? Because lots of the export income is earned by foreign-owned companies who then repatriate it back to their foreign owners.
BHP Billiton’s latest annual report shows 40 per cent of its shares were listed on the London stock exchange. Add in some foreign investors who own stock listed in Australia and the level of foreign investment in BHP Billiton is now likely to be well over 50 per cent. For the other big mining companies the position is worse; Rio is at least 70 per cent foreign owned while Xtrada shares aren’t even listed in Australia. A decade ago the ABS estimated the level of foreign ownership in Australian mining to be around 45 per cent, but that was well before the takeovers and mergers that have characterised the mining industry in recent years.
And what of the booms impact on other areas of the economy? Past experience has shown that a higher Australian dollar reduced the competitiveness of other industries and exposed home-owners to higher interest rates. Indeed, last month the Sydney Morning Herald reported that five of Australia’s top business leaders ‘said the impacts of the boom, including a higher cost of living, a shortage of staff and other industries withering, are the greatest challenges facing Australia.’