Did the mining boom save Australia from the GFC? > Check the facts
Who: “Everybody knows we were the bedrock of getting Australia through the global financial crisis.” Mitch Hooke, Chief Executive of the Minerals Council of Australia.
The Claim: The mining boom saved Australia from the global financial crisis.
The Facts: While Australia did not go through a recession during the GFC, the mining industry did.
Discussion of evidence: The Commonwealth Treasury studied the resilience of the Australian economy during the GFC in a report in September 2011. The report found it was the combination of lowering interest rates and the fiscal stimulus that maintained the Australian economy through the GFC.
When reporting to Senate estimates Ken Henry the then head of Commonwealth Treasury had this to say about the role of the mining industry during the GFC:
“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.” (Page E17.)
Thanks somuch for the info! Appreciated!
Possibly distorting the facts by looking at a small subset of the data. If you are trying to promote facts then don’t quote other’s people’s claims without the backing facts even if they are potentially reputable. The effect of the GFC on world economies lasted for years not just 6 months and comments usually relate to the entire period. The mining indusry was already relatively booming pre-GFC compared to the 5-10 years prior and recovered very quickly post the 6 months immediately after the GFC to again grow and employ more people. Let’s see the investment dollars and number of people employed by the mining by year for the last 10 years with comparison to other industries in the same manner.
Agree with Andrew this is very short sighted. Mineral prices recovered worldwide as a result of Chinese stimulus which led to mining boom part 2 which massively bolstered the economy during 2011/12.
Andrew and frogger, i think you are reading too much into this answer. The facts presented clearly refute Mitch Hooke’s statement that mining was a bedrock in getting australia through the gfc. the facts you present simply further illustrate that mining is more susceptible to international forces of supply and demand. while it presents many opportunities when times are good, it is no bedrock.
Matt the effect of the GFC lasted more than 6 months. So refuting the claim by only looking at a 6 month window is not providing a clear answer. We need more facts before it becomes conclusive.
This is why the public needs facts, not media sensation we are sick of it! Let the leaders have their debates to cover all facts and stop with the negative spin on the issues so the public can make an informed decision at the next election.