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No 'mining boom' in South Australia: report

25 June, 2012

A new report by the SA Centre for Economic Studies suggests that while mining activity has grown strongly in South Australia over recent years, the State is not in the middle of a mining boom.

The South Australian Centre for Economic Studies claims the State is not experiencing a "mining boom" and warns against resting all our hopes for the future prosperity of South Australia on the realisation of a mining boom.

The comments are made in the Centre's latest Economic Briefing Report, released recently. The Report provides a twice yearly appraisal of the state of the South Australian economy and is prepared by economists from the University of Adelaide and Flinders University.

In the report, the Centre suggests that while mining activity has grown strongly in South Australia over recent years: "it is nevertheless difficult to sustain the notion that South Australia is in the middle of a mining boom".

In support of this conclusion, the report notes that: "mining activity in South Australia is still relatively small, such that mining output...accounts for around only 4 per cent of the State's Gross Product".

Other evidence to support the argument that South Australia is not yet experiencing a mining boom include the fact that new capital expenditure by the mining industry in South Australia was less last year than it was four years ago; while expenditure on mineral exploration in South Australia in 2011 accounted for only 6.6 per cent of such expenditure across Australia as a whole.

The Centre notes that the one project which would dramatically change this picture of a still small mining sector in this State is the proposed expansion by BHP Billiton of its Olympic Dam mine.

The cost of this project is estimated to exceed $20 billion. If this project were given the go ahead today it would lift South Australia's share of "advanced new mining projects" across Australia from 0.5 per cent to around 9 per cent, a dramatic increase, which underlines the sheer size of this project.

The report goes on to note, however, that: "unfortunately, there is now increasing doubt about when the Olympic Dam project will proceed". The latest statements from BHP Billiton indicate that the BHP Billiton Board will now not give consideration to final approval of the project until later this year.

The report also suggests there are several factors that will limit the contribution the Olympic Dam project will make to the prosperity of the South Australian economy, even once it does proceed.

The report concludes: " is important to keep a proper perspective on the extent to which growth of the mining industry will contribute to growth of the South Australian economy in coming years. Its contribution will not be insignificant, particularly once construction of the Olympic Dam expansion proceeds, but at the same time it is unlikely to be so significant as to be able to solely drive the continued economic expansion and prosperity of the State.

"And doubts about the timing of the Olympic Dam expansion need to be kept in mind. All in all, it would not be wise for South Australians to rest all of our hopes for the future on the prospects of a 'mining boom', especially if it meant becoming complacent in achieving policy objectives and outcomes in other strategic areas.

"In particular, all South Australians need to continue to work towards growing the overall competitiveness of the State and towards growing productivity within the State. It seems to us that still more could be done, and should be done, in this area."

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Lou Furbadamo | Friday, June 29, 2012, 1:28 AM
Clearly these “naughty, insolent, disobedient types” at the SA Centre for Economic Studies haven’t taken serious head of Julia’s, Swannie’s and all the other glowing soothsayer’s edicts to beneficially doctor, or avoid perpetuating bad economic news! But really, someone should inform the over extended, big spending and now itching and scratching SA. government, that not all the flee free chickens have come home to roost for tomorrows long heralded golden egg laying salvation! And neither has the trusty local butcher brought home all the promised lean bacon. Therefore, the taxing sheriffs of Nottingham in state treachery will obviously have to find some other ripping ways to patch up and camouflage the massively understated, sucking Budget Black Hole. Or most likely, remain in debilitating, basket case debt, denial and delusion mode for an awful long time! Probably as long as the earlier crippling State Bank Fiasco that many cursedly remember! Where’s that slick, darkish, devious, debilitating, dastardly, devouring Mr. “Dim Darkest Dark” when you need a mongrel example of what can dishonestly slimily happen if state politicians incompetently mismanage and stuff up in dopey “gay aBannonden”. Funny how there’s now no hyped up press conferences to update the revised gloomier facts, after all the earlier choreographed Ranndy and chantilly Hoo-Aahh! Mutedly, the more timidly softer and considerate chirping JJs (Jack & Jay), are all still pleasantly snuggled positive in their deceptive, well healed little dream world nest. Wishing and hoping the happy, comfy perked Foley days won’t end and that this awful “Furbo economic reality” won’t come to painful pass. With pre-emptive recommendation and advice hopefully not! But naggingly, the struggling sorry facts speak for themselves. Pity the insight and courage to report the true status of our dire financials is lacking, And that severe belt tightening is required to avoid living beyond our modest current means. Reactively, the government inefficiency and waste that’s destroying competitiveness, productivity and sustainable wealth creating jobs needs to eliminated, in preference to the current symptomatic Union pandering, token government job concocting and temporary crucial company bailouts. In short, we need to eliminate redundant, duplicating State Governments full stop! And start having consistently good laws and regulations across the country to give industry every competitive chance of survival. Australia, with the highest ratio of politicos and probably public servants per capita in the industrialised world, is grossly over governed, and financially and competitively relatively weakened. Sadly, self centring governance is mostly poor and inefficient and in the worst State cases atrocious! Smaller Government is the sensible, safer way to go to contain rampant nation sapping! Like the other Western Democracies, we simply don’t need this third duplicating layer of government, which is a throw back to Federation, where distance and remoteness was a governing issue. In particularly, SA. Governments since Playford have proven to be mostly a wasteful perennial liability to tax payers. There’s better ways of occupying peoples time than non productive bureaucratic duplication and self justifying duplicity! At the end of the day when all is said and not done, is the deceptive feel good representation nonsense, that’s at best mostly entertainment, worth all the extra dosh billions we’re forced to pay? I think not! I’d rather the extra cash thank you. So, it’s time to prudently start putting this historically wasteful layer of parochial inefficiency and restraint out to pasture and away from important national decisions, cause we just don’t need the unnecessary extra hindrance and burden.
Kermit | Friday, June 29, 2012, 12:26 PM
Lou, you are very expressive, but correct! ....important to note that the Bank SA disaster was only fixed on a superficial level (swept under the carpet). We will continue to carry the debit for these bad political decisions for many many years to come. An estimate at the time was 2-3 generations...we have only just started the quest to payback of our debits. Until we find a new statesman for government (state and federal or is that feral!) the political mire will only get deeper! In the meantime we wonder about in the wilderness.....darkness!
Lou Furbadamo | Friday, June 29, 2012, 1:51 PM
Kermit, I concur it’s impossible to fully recover from these disasters because the brutal scars linger, and what’s lost and destroyed can’t be magically recovered. It can only be made up, or replaced with new wealth. But the original opportunity lost remains, such that when things return back to “normal”, they’d have arguably been actually better, had the original disastrous loss not occurred! Further, learning the disgraceful lessons well, and having a detailed, long and appropriately cautiously cynical and unforgiving Furbo memory. I detest the repeat selfish, thieving, snorting, deceptive or denying types so common found in politics today. My suggested strategy here is to admit we have ongoing, serious entrenched political and economic waste problems that hold our broader economy back and then try to resolve them. If you can’t immediately fix them, first try and minimise by deleting as far as possible and then quarantining remaining infected, “parlous sectors”. That way at least your able to survive and move on with far less damage, until all issues are satisfactorily addressed. Importantly, it’s the intent and ideas that really matter and need convincing, not so much how embellished they’re expressed, although past examples help get the message across. Hopefully you agree that by eliminating nuisance state governments and spreading responsibility to “streamlined and improved” Federal and Local Levels of government will reduce the economic waste burden on Australians and improve industry competitiveness and long term prosperity. Cheers Furbo!