Australia is home to many of the world™s mining giants. In recent years, Australia has profited considerably from a global mining boom which has seen the industry flourish at home and overseas.
After the 19th Century gold rush it is our biggest mining boom. In the decade to 2011, rapid growth in Chinese demand for iron ore, coal and other minerals – more than tripled the Australian mineral prices. Since 2000, Australian GDP, wages, household incomes and employment have all grown steadily and strongly.
The mining boom has contributed directly to wage and income growth in two main ways.
First, the doubling of the terms of trade â€“ the prices paid for our exports compared to the prices we pay for imports â€“ has raised national income. In the 2000s the terms of trade kept real income growth above 2 percent, despite slowing productivity growth. The additional income ended up in peopleâ€™s pockets via wages, business income and dividends, and through the tax-transfer system. The rising real exchange rate has transferred income from miners and from the producers of other trade-exposed goods and services to consumers. Consumers pay lower prices for traded goods and services. As incomes have risen, so has household spending on discretionary items.
Second, increasing mining activity and the very large increase in investment have contributed to steady growth in employment and output well beyond the mining sector, particularly in the period after the global financial crisis. The mining boom has supported rapid output growth in the mining states of Western Australia, Queensland and the Northern Territory. The dollar value of output in mining states has grown by over 120 per cent, compared to 63 per cent in the non-mining states. The difference in growth in real output per person is much smaller but still striking: 20 per cent in the mining states and 12 per cent in the non-mining states. As a result, wages and incomes have grown faster in the mining states.
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