Australia’s prosperity is due to its mineral resources
China’s appetite for Australian commodities has underwritten country’s prosperity for the past 16 years.
The resource sector now accounts for almost a quarter of all business capital stock, double its share in 2004 when the great boom began.
This has made Australia the pre-eminent supplier of mineral and energy resources to the world. The high cost of Australian labour has been more than offset by the world-beating efficiency of its resource companies, by the intrinsic quality of the reserves they exploit and by the strength of Australian governance. Those attributes have been rewarded with prices that have been higher for longer than at any point in Australia’s history.
But the China-led resource boom meant that the average price for Australia’s exports since 2004 has been about 60% higher relative to the average cost of imports than was the case over the preceding 20 years.
This has helped to sustain strong growth in living standards in Australia despite relatively poor productivity.