{Contributions to Business Spectator} Mining Boom warning

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Contribution to http://www.businessspectator.com.au/article/2012/3/26/exchange-rate/lews-grave-mining-boom-warning

Lew’s grave mining boom warning

 26 Mar 2012, 7:48 AM

Last week marked an interesting evolution in the public debate on the Australian mining boom. After months of political jostling, the Senate finally passed the mineral resources rent tax, which will apply a 30 per cent tax on iron ore and coal.

This also coincided with the release of new research from the Australia Institute putting into perspective the upside and potential flip-side of the boom by highlighting some ‘counter-intuitive’ negative impacts on productivity and employment. The report reveals modelling for a mining project in Queensland has shown that under generous assumptions one non-mining job will be destroyed for every two mining jobs created.

Those findings were serendipitously echoed by former Reserve Bank board member Solomon Lew who declared that he believes “the central bank is mishandling the boom by maintaining high interest rates to protect the mining sector to the detriment of the non-mining sector, particularly retail”.

These recent developments are particularly interesting because, apart from social and environmental issues or regular calls for the mining sector to share the profits, the systemic economic risks emanating from the boom have never really been on top of the public agenda…

Read the full piece on businessspectator.com.au

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