Myth-buster! Peter Costello explodes a few fantasies – 21 September 2016

Home / Views / Myth-buster! Peter Costello explodes a few fantasies – 21 September 2016

It is a pity that Peter Costello’s address to the Minerals Industry on September 11 did not get more exposure: It is a gem – skilfully debunking popular myths with a few concise facts.

Myths such as:

Australia’s continued embrace of ‘old’ industries like mining, is holding it back.
Or, That our continuing budget deficits are the result of revenue shortfalls caused by the end of the latest mining investment boom.

Both myths were very neatly punctured. Let’s start with the supposed folly of embracing ‘old’ industries like mining. In fiscal year 2000-1 mining and metals (including coal) and petroleum products together accounted for around 36 per cent of Australia’s export earnings.

Today the total is very close to 50 per cent – with mining alone accounting for more than 42 per cent. That so called ‘declining’ industry is doing very well for Australia. It is keeping us solvent.

The myth that mining’s decline is responsible for our budget deficits is even more easily torpedoed. Costello reminds us that in 2000-1 (when iron ore was trading at $13 per tonne) Australia ran a budget surplus — one of eight consecutive budget surpluses. Yet we ran deficits through the peak years of the mining boom (2008-12) and are still running them now when we are shipping record tonnages of iron ore at prices around $57 per tonne). Expenditure is the problem, not income.

Peter Costello was anxious to stress that this support for mining did not imply any lack of faith in the new and emerging technologies — whose best days may be still to come. Rather he was keen to point out that while we tend to focus on gee-wiz technologies like phone apps, the advance of science has also revolutionised many existing industries. Driverless haul trucks guided by GPS were just one obvious example. In fact, the Australian mining industry has sustained its competitive advantage and earned its best in class reputation by being innovative and embracing new technologies. And it’s not just mining and minerals processing per se, it’s the whole services, advisory and equipment manufacturing industry that’s grown up around it- we are best in class here too. (See my presentation to the AusImm – International Mine Management in August 2016 on Resources Industry Outlook and Innovation as a Driver posted on this site on 23 August 2016 http://www.owenhegarty.com/23-august-2016-ausimm-international-mine-management/ – And, if you are really short on light entertainment, you can listen and view on the AusImm website http://www.ausimm.com.au/publications/publication.aspx?ID=17042.)

Costello does not see new ideas as a threat to mining – quite the contrary. Mining can both harness the productivity gains and feed on the needs these industries create.

The great threat comes not from new ideas, but from an old one: The idea that we can somehow revert to a mystical bucolic age. From those that only want to stop things. Who are intent on propelling us back in life and times from the drone age to the stone age! That idea, he suggests, is harboured more in the mind than in their lifestyles.

If you missed it, the full speech can be read on http://bit.ly/2016Ozmininglecture.
I thoroughly recommend it.