Did coal help Australia through the GFC? > Check the facts
The Sydney Morning Herald said on Wednesday that “hunger for Australian coal helped power the nation through the global financial crisis.”
Mining was not the economic lifeline for Australia during the global financial crisis (GFC) it’s commonly believed to be. In fact, mining employment fell further than total employment during the GFC. The figure below shows employment from approximately a year prior to the GFC and two years after. It shows that, while mining employment had been growing quickly in the lead up to the GFC, it collapsed substantially immediately after. In comparison, there was only a minor fall in total employment.
Mining and total employment (2008 to 2011)
Source: ABS 6291.0.55.003 Labour Force, Australia, Detailed, Quarterly
The fall in mining employment during the GFC was discussed by then Treasury Secretary, Dr Ken Henry, at Senate Estimate hearings.
“I have heard it said on a number of occasions, in fact I have lost count of the number of times I have heard people say, including senior commentators, that the mining industry saved Australia from recession or, even in less extreme versions of the statement, that the mining industry contributed strongly to Australia avoiding a recession. These statements are not supported by the facts I would have to say.
These facts include:
“In the first six months of 2009, in the immediate aftermath of the shock waves occasioned by the collapse of Lehman Brothers, the Australian mining industry shed 15.2 per cent of its employees. Had every industry in Australia behaved in the same way, our unemployment rate would have increased from 4.6 per cent to 19 per cent in six months. Mining investment collapsed; mining output collapsed. So the Australian mining industry had quite a deep recession while the Australian economy did not have a recession. Suggestions that the Australian mining industry saved the Australian economy from recession are curious, to say the least.”