Mining industry 'overrated'

A new report suggests the Australian mining boom did

not have the positive effect on the national economy which it was thought to. Photo: Reuters

Australia's mining boom has not been as beneficial for the economy as the public thinks, with less people employed in the industry than popularly believed, and most of the billion dollar profits going overseas.

A new report by the Australia Institute has revealed the mining industry is mostly foreign owned and damages other Australian industries by helping drive up the dollar.

But the public perception was that mining was much better for the economy than in reality, according to the study titled Mining the truth: The rhetoric and reality of the commodities boom.

"Much has been said about the changing face of the mining industry, where the effects of the boom have been both substantial and positive," the report reads.

"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 report also looked at the "spin" around the mining industry and how it portrayed itself through advertising and websites.

It says the industry had heavily spruiked the amount of employment in mining, the amount of taxation revenue and the benefits of rising share prices and the level of mining exports.

A survey asking the public what percentage of the Australian workforce was engaged in mining found the average response was 16 per cent. The real figure is 1.9 per cent, with the report saying the industry had played a "very small" role in the growth of employment in Australia.

The report also found the vast majority of profits were actually going overseas and not into the Australian economy.

"According to the ABS the total pre-tax profits earned by mining firms operating in Australia was more than $51 billion in 2009-10," it says.

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

"But of course the ownership of Australian mining companies is far from evenly distributed across the Australian community, as already noted. Indeed, around 83 per cent of profits will in fact be sent offshore to the foreign owners of mining operations in Australia."

The study noted the ill-fated Resource Super Profits Tax could have benefited the domestic economy by $200 billion in the next decade, but instead most of that money would be going overseas.

The study concluded the people who benefit from the mining boom were mine workers, shareholders, foreign owners and superannuants who gain about $2 a week from the effects of the boom.

The "losers" were homeowners who have to pay higher interest rates as the mining sector "overheats" the economy, and workers in other sectors such as manufacturing, tourism and education who have had lower job security and employment because of the rising dollar.

"Strong world demand for Australia's minerals has driven up the exchange rate which, in turn, has reduced world demand for our manufactured and agricultural goods as well as for our tourism and education export services," the report explains.

brisbanetimes.com.au is seeking reaction from the mining industry.

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