Friday, November 17, 2017

Shooting ourselves in the foot?

It is fashionable in some circles to think of Australia’s economy as one in full transition from primary production and resources into a services based economy. This goes does well in inner urban circles where white collar professionals, many of them removed from connections to life beyond a comfy three-kilometre ring around our CBDs, tend to dominate. However, it’s a mistake to ignore the economic reality which is that Australia’s export earnings continue to rely almost entirely on stuff we dig up from the under the ground or grow on top of it.

Take coal for example. In 2016 coal was Australia’s number 2 export earner, second to iron ore. The value of coal exports, for context, were nearly eight times the value of professional services exports. In a top ten league ladder of export earning industries, professional services finished 10th in size. The importance of a single commodity (coal) as an export earner makes the relentless attacks on the proposed Adani mine and related infrastructure harder to understand.

Whatever your position on renewable energy for our domestic needs might be, trying to scuttle our second biggest export earner is reckless economics and irresponsible politics. The commodity earns us all valuable foreign exchange dollars which help keep our national economy afloat. The industries around the search for, extraction of, site remediation and transport of that commodity also employ many thousands of people – which keeps a large number of regional communities alive, as well as city based professionals engaged in industries like engineering, environmental science, transport and infrastructure.

Ironically, many of the coordinated and highly emotive attacks on the coal industry and Adani in particular have come from its beneficiaries: urban residents who enjoy the benefits of Australia’s trade balance in the form of social and physical infrastructure standards which remain the envy of many countries. The evidence is incontestable: without coal exports, our economy would plunge into a massive hole, unemployment would rise, credit would be squeezed, and infrastructure projects clamoured for by the very chattering classes so vehemently opposed to coal, would cease. We all lose.

Queensland’s real gross state income surged recently, and it was down to an improvement in coal prices – as Gene Tunny from Adept Economics has noted: “To illustrate, coal royalties in 2016-17 ended up being an estimated $3.4 billion compared with $1.7 billion in 2015-16.”

Sadly, the economic reality is now lost in a debate about coal, energy and the environment where truth was an early casualty. Facebook and other social media channels carry and then amplify alarmist and simply false claims to a wider and increasingly gullible audience. The suggestion that we could have an informed discussion about the importance of coal exports to our standards of living is hard to hear above the cacophony of anti-coal protests. 

None of this should be taken to suggest I’m not supportive of the growth in professional services. As a professional service person myself, I’d be mad not to be. But I equally appreciate that our economy – even for those in inner urban circles that are far removed from coal or iron ore mines, or from manufacturing plants or farms or heavy industry – desperately needs these industries for our collective benefit. 

Being able to afford eye wateringly expensive infrastructure projects or schools or hospitals in the hearts of our city centres owes much to what we can continue to dig up or grow and sell overseas. We basically can’t have one without the other and suggesting this is possible is akin to taking a gun, pointing it at your foot, and pulling the trigger.


4 comments:

  1. Quite so, Ross! Astounded at the growing wilful ignorance of the "inner urban circle". They hide their heads in the sand whilst they increasingly espouse socialistic dogma. Look at West End residential development, it was great whilst it was in somebody else's backyard ... but be damned not in ours !

    They little concept of how the resources industry provides for the welfare and jobs that they enjoy.

    ReplyDelete
  2. Great articles and useful information for readers. Thanks for sharing such good articles. Web Development Brisbane
    Web Developer Brisbane

    ReplyDelete