A packed auditorium including 15 media representatives heard from a range of economists debating the nature and implications of the resources boom at the City Flinders Campus of the University yesterday.
Keynote speaker Reserve Bank Governor Glenn Stevens kicked off proceedings with a strong message on setting aside some of the public and private income generated from the boom for the future.
Although he would not be drawn on the merits of a resources tax, Mr Stevens said the suggestion that Government establish a "stabilisation fund" from mining revenue for use when the boom subsides was "an option worth thinking about".
Victoria University economists Professor Peter Sheehan and Professor Bob Gregory said this boom is like no other because today's economic climate is vastly different to that which prevailed during previous booms.
They and other speakers pointed to a range factors that combine to make this a more complex picture than in the past:
- The terms of trade are now more favourable, with a small surplus after years of deficits
- Commodity prices were at record highs
- Demand for Australia's minerals is the strongest we have ever seen, and growing, fed largely by China and India
- The labour market is more reliant on short-stay workers to overcome skills shortages, particularly in the resource rich states of Western Australia and Queensland
Professor Gregory said the unique nature of this boom required different ways of measuring the gain in economic terms. The Gross Domestic Product (GDP) has been the standard measure for boom economies. However, he suggested that the Real Growth Domestic Income (RGDI) measure better demonstrates the significance of this boom.
He added that the boom had not yet started, and what we have now is a building and construction boom. The export boom is yet to come.
Professor John Freebairn, from the University of Melbourne, was less reticent on the resources tax issue than many. He said the Government had "botched" the introduction of the tax at its first attempt last year, and now needed to sort it out, especially taking into account the concerns of the many opponents in Western Australia.
One of its options might be to offer a lower corporate tax rate across the board in return for a resources tax.
As attention turned to how Victoria and other non-resource states were faring during the boom, VU's Dr Bruce Rasmussen provided a sobering note on equity issues.
Focusing on Victoria's fastest growing area, the west of Melbourne, he produced a serious of slides to show that thus far, beneficiaries of the boom appeared to be the wealthy elites of inner and eastern Melbourne, whose income from shares and investments was rising rapidly.
Conversely, residents of Melbourne's most disadvantaged areas, including the west, were receiving little or nothing from the boom and this would likely compound existing inequalities without Government intervention.