Australian farmers have lost $61.5 billion in export income since the mining boom pushed the Australian dollar to historic highs, a new analysis by The Australia Institute estimates.
Launched last night, the report – “Still beating around the bush: The continuing impacts of the mining boom on rural exports” – examines the rural sector’s export income from the beginning of the mining boom in 2003-04 until 2011-12.
The Australia Institute’s Senior Economist and report author Matt Grudnoff said producers have fared badly as a result of the high Australian dollar, suffering a 47 per cent drop in export earnings since the boom began.
“The mining boom is great if you work in the mining industry,” Mr Grundoff said.
“But for other sectors in the Australian economy which rely on export earnings the boom has come at an enormous cost.
“Our farmers are price-takers not price-setters.
“This has meant that the surge in the Australian dollar due to the mining boom has had the knock-on effect of reducing the value of their exports.”
Within the rural sector the cotton and wheat industry had been severely affected by the mining boom, he said.
Cotton had lost $1.3 billion in 2011-12 and $2.5 billion over the nine years of the boom, while the wheat industry had lost $3 billion in 2011-12 alone and $8.3 billion over the nine years.
The beef and veal industry had also been greatly impacted with export income cut by $2.3 billion over 2010-11 and $8.5 billion over the length of the boom and the sugar industry losing $815 million in 2010-11 and $2.7 billion over the boom.
“For the Australian economy to remain strong it needs to have many viable industries,” Mr Grundoff said.
“If the mining boom is allowed to ruin the rural sector then who will be left to fill the employment gap when the mining boom ends?
“Farmers all around the country have every right to question whether their elected representatives have shown enough regard for the impact of the boom on their livelihoods.
History is full of examples of economies that failed because they were too reliant on a few industries.”
Resource boom ‘taken for granted’
While the Australia Institute report criticises the effects of the mining boom, a Reserve Bank of Australia report late last week highlighted its contribution to employment creation.
The RBA analysis found that the share of total employment accounted for by the resources sector had doubled since the mid-2000s.
The growth was reported to have created around 500,000 jobs across every major industry in the last seven years.
The Australian Petroleum Production & Exploration Association said the Reserve Bank report meant that more than 9.75 per cent of all Australian workers now depend on the resource economy, both directly and through the creation of jobs in construction, manufacturing and other sectors.
The Association said Australia was in danger of failing to capitalise on the resource boom because the Australian Government continued to ignore calls for a stable taxation system.
“The report supports APPEA’s view that the nation-wide impacts of Australia’s resources boom are overwhelmingly positive,” APPEA Chief Executive David Byers said.
“Government must help manage the economic adjustment necessary to maximise the benefits flowing from this record investment, rather than focusing on their re-distribution.
“Almost $200 billion is currently being invested in Australian petroleum projects and the Australian economy is growing because of these unprecedented investments – not despite them.
“This is why governments must help, rather than resist, the economic adjustment needed to maximise the benefit associated with our industry’s growth, by providing a stable taxation system, marketbased energy markets, and efficient and science-based regulation of industry activities.
“Governments need to be mindful that Australia’s reputation as a place where investors can safely make long-term decisions is being eroded and that this is happening at a time when new competitors are emerging.”
Mr Byers said the RBA report was consistent with a report by Australian Venture Consultants, The Wider Contribution to Australia of the Oil and Gas Industry, which shows through a selection of case studies that more than $29 billion has been spent with Australian-based businesses as part of the current wave of oil and gas investment.
He said the report described how oil and gas companies were using and expanding Australia's oil and gas services expertise and capability and were contributing to employment and training; research, development and technology; community infrastructure and social investment; and environmental research and conservation.
Sources: The Australia Institute, Australian Petroleum Production & Exploration Association