A more sober assessment is now being seen as closer to the real situation.
This is attached below.
It posits a reduction in the role of mineral exports with some thoughts being developed around "what else can be done?" Some think an expanded role for agriculture and livestock - maybe, others think we need to focus on redeveloping older infrastructure.
Would it see a more gradual move to develop the north of Australia? That has not been a focus so far. What ever, the news article does provide some sober thinking from some reasonably knowledgeable people, and also looks at a few social issues, rather than just location and economics.
But it does not seem to look at a greater role for the north of Australia, which seems odd to those living in the north of the country, especially today when Conoco was inferring a very large upgrade to gas processing facilities in Darwin with a very long pipleine from WA [ yes - not committed, but a definite idea float!]
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The 'Asian Century' may not be that good
WE'VE heard so much about the potential for Australia to
benefit from "the Asian century" that it seemed right that two
eminent Asian economists opened Wednesday's official conference on the Asian
white paper with a warning: it might not be that good.
Malaysian-born, Melbourne-trained economist Jayant Menon,
now with the Asian Development Bank, said that if all went well, Asia by 2050
could have living standards similar to those of Europe today. But it is also
possible that countries such as China, India and Indonesia could reach
middle-income levels, then lose momentum, as Malaysia and Thailand have.
Asia too has challenges to overcome, Dr Menon reminded us.
It has been very successful in its "catch up" phase of growth, but to
reach Western levels, Asian countries will need to spread the benefits to all
their people, become innovators at the frontiers of technology and science,
develop lower emission technologies, attractive cities, and deep financial
markets — and in China, among others, cope with a fast-shrinking labour force.
Professor He Fan, of the Chinese Academy of Social Sciences,
was similarly frank about China's future challenges, which include a
fast-shrinking labour force, due to its one-child policy. China's workforce
will peak next year, he said, then start shrinking — putting a serious brake on
growth.
And while Australia could expand its exports to China to
high-value agricultural produce, manufactured goods and services, he noted,
they will have to compete there with manufactures and services from all over
the world — and proximity will not be the big advantage it has been for exports
of bulk minerals.
Professor Anne Krueger, former deputy chief of the
International Monetary Fund, was also wary of assuming that Asia is set to
continue its stellar growth path. She backed Dr Menon's warnings, saying Asian
countries will face slower growth as they approach convergence with the West
and in China and Korea, workforce growth reverses, and fewer workers have to
support many more retirees.
The Gillard government appointed former Treasury secretary
Ken Henry to head a taskforce to prepare a white paper (policy statement) on
how Australia could best position itself to benefit from what it calls
"the Asian century". Julia Gillard and Treasurer Wayne Swan
constantly beguile us with images of Australian schools, health care
professionals, farmers and niche manufacturers finding new markets among Asia's
rapidly-growing middle class consumers.
At the seminar, hosted jointly by Treasury, the Reserve Bank
and the International Monetary Fund, no one disputed the central thesis that
Australia's future lies in developing closer ties with Asia. But there was a
clear gulf between the optimism of officials' confidence that Asia will sustain
high commodity prices for a decade or more, and the estimate of Victoria
University professors Peter Sheehan and Bob Gregory that within a year or two,
mining investment will start falling, and detracting from our growth rather
than sustaining it.
Both the officials and the outsiders agreed that what we
call the resources boom really has three distinct phases. To summarise
Professor Gregory's version:
Phase 1: rising
commodity prices. Between 2003 and 2011, the world decided to roughly double
what it paid for our minerals. That added about 10 per cent to Australian
incomes, and drove up the Australian dollar, making our imports cheaper. But
that phase ended a year ago. Our minerals prices have fallen since, and could
fall a lot more ahead.
Phase 2: rising
mining investment. That began in 2003, and is still building to its climax, now
expected to be in 2013 or 2014. Mining investment is now running at 10 times
the levels of a decade ago. In the last year, in constant prices, it grew by
$33 billion while the whole of GDP itself grew just $45 billion. It dominates
the economy, but soon it will be shrinking, and we will need to find new drivers
of growth.
Phase 3: rising
mining exports. You might think that has happened already, but not that much.
In the past decade, the volume of mining exports has grown just 3.9 per cent a
year, not much faster than GDP. The next five years will see much more
spectacular growth: Sheehan and Gregory estimate that it could add $100 billion
a year to our GDP.
But on their scenario, that would be offset by a similar
fall in the value of mining investment, as Phase 2 goes into reverse. And
Sheehan and Gregory point out that there's virtually no jobs in mining — the
vast Pluto LNG project will employ just 600 people, once it is up and running —
and many of them are 100 per cent owned.
"An extreme example of these trends is the Shell
Prelude project, which is a $15 billion wholly foreign-owned LNG project
situated in waters offshore in Western Australia", their paper notes.
"Shell is constructing in Korea a massive platform
which will be towed to the offshore site, and from which all drilling,
liquefaction and shipping activities will take place. None of the gas will be
piped to the Australian mainland. The domestic impact is likely to be minimal,
other than through the tax paid."
They want the Federal government and the states to combine
to create a new growth driver for Australia by setting a joint,
semi-independent infrastructure authority, which could borrow under Federal
government guarantee, and invest heavily in tackling Australia's infrastructure
backlog, which has been estimated at $700 billion.
Treasury secretary Martin Parkinson was not impressed. He
suggested that the private sector will provide the growth engine, and if the
states need more money for infrastructure, they should stop exempting small
business from payroll tax, and cut back their other tax concessions.
Presumably Parkinson is giving similar advice to Swan about
the Federal government's own tax concessions, which Treasury last totted up at
a cool $112 billion a year. There's enough money there to finance any number of
initiatives to keep the economy ticking on.
http://qcl.farmonline.com.au/news/nationalrural/agribusiness-and-general/finance/the-asian-century-may-not-be-that-good/2624762.aspx?storypage=0the second part originally written by TIM COLEBATCH, THE AGE 20 Sep, 2012 08:00 AM and acknowledged.
