Wednesday, September 5, 2012

Too Much Luck: The Mining Boom and Australia's Future, by Paul Cleary

Paul Cleary’s Too Much Luck is a nifty primer on the Australian mining boom. For those who pay a cursory attention to the media but want a more detailed look into the subject away from all the noise of television and internet reporting, then this short book is just the ticket. Cleary works as a senior reporter for The Australian and so is on top of all the facts from a working journalist’s perspective. This means he writes in a sharp and punchy manner and can communicate complex information in a user-friendly manner. He distils the big picture into an accessible 160 page guide.

Too Much Luck acts very much as a cautionary tale. Historically, Cleary shows, economies that experience resource booms squander their money and skewer their economies. Easy money comes rolling into the coffers and the temptation is to spend like there’s no tomorrow. (One of the book’s big ideas is to create a foreign investment fund for future use, or for economic downturns.) Cleary is very critical of the Howard government’s use of the money from the China boom – ‘pissed up against the wall’ on tax cuts and other middle class entitlements.  

Other havoc that resource booms can wreak are to the structural fundamentals of an economy. Once investment, capital and other resources are deployed to a resource sector, other parts of the economy start to atrophy. This is why we have what is now described as a ‘two speed’ economy. Mining is going great guns, while retail etc. is struggling. For Australia, high commodity prices, which pay mining huge profits, also pushes the value of the dollar up. This makes life tough for manufacturers, tourism and retail.

The answer to all these woes? Saving for the future, taxing appropriately and supporting struggling areas of the economy that we may need when mining enters a downturn.  While globalisation may promote the idea of specialisation, an economy with a certain degree of diversity is a good idea.

Basically, we need to plan for the long term, not fritter easy money away on a short term shopping spree.

This will be a hard job for politicians as Kevin Rudd’s failure to implement the Resource Super Profits Tax has shown.

Too Much Luck: The Mining Boom and Australia’s Future, by Paul Cleary. Published by Black Inc. ISBN: 9781863955379  RRP: $24.95

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