Mining boom can't carry economy

Australia's local governments have been warned the current mining boom is not big enough to carry the national economy.

The Australian Local Government Association says its latest State of the Regions report indicates there is a risk that business confidence might evaporate in regions that depend on non-mining industries.

The report, launched at the association's general assembly in Canberra on Sunday, acknowledges that mining makes up only about 20 per cent of the economy.

The other 80 per cent is being adversely affected by the high exchange rate and relatively high interest rates in a 'patchwork economy'.

Economist Peter Brain, who co-authored the report, said difficulties were arising for non-mining trade-exposed industries because of a faltering recovery from recession in North America, Europe and Japan.

That had led directly to reduced demand and indirectly to increased competition as businesses in those countries tried to increase exports.

'For those who never look beyond the headlines, the current mining boom would seem large enough to carry the whole Australian economy with it,' Dr Brain said at the report's release.

'But this has not been the case.'

Economic extremes were being experienced across the country.

In Queensland, times were prosperous in the Bowen Basin and in towns and cities that supported the construction boom, Dr Brain said.

'By contrast, far north Queensland is doing it tough because recession overseas and the high Australian dollar have hit the tourist trade.'

Association president Genia McCaffery said the report's findings were a challenge for the federal government.

Canberra needed to help regions make the most of their individual strengths, she said.

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