Mining Boom Sees Disadvantaged Aussies Become Prosperous As Adults: Treasury Analysis

Australian Federal Treasurer Jim Chalmers speaks at Parliament House in Canberra, Australia, on July 28, 2022. (Martin Ollman/Getty Images)

Australia’s mining resources sector has seen Queenslanders, along with Western Australians, being lifted out of disadvantage, while incomes were higher than their parents when compared to other states.

In an opinion piece published on Jan. 13, Federal Treasurer Jim Chalmers said that the mining boom had made a considerable contribution to the state’s economy.

“[It’s] helped to drive long-term growth and created thousands of jobs for Queenslanders,” Chalmers wrote.

“And while two-thirds of Australians in their early 30s are earning higher incomes than their parents did at the same age, that figure was 80 percent a few generations ago.”

According to a new Treasury analysis, the mid-2010s mining boom triggered a sharp uplift in economic mobility in Queensland and Western Australia.

Mobility refers to how easy or hard it is for a kid from a disadvantaged background to become more prosperous themselves as an adult.

“It’s important because it tells us if we’re handing on a better deal to the next generation and whether we’re making sure every young Queenslander has every opportunity to succeed in life,” Chalmers wrote.

The Treasury analysis also revealed Australia is on par with Sweden and ahead of the United States when it comes to income mobility.

For instance, a child born to parents in the bottom 20 percent of income levels in Australia is over 60 percent more likely to reach the top 20 percent of incomes than a child in the U.S.

Chalmers said he would like to see this trend replicated.

“This is important because while Australia does pretty well on economic mobility compared to many of our international peers, there’s still plenty of room for improvement, and the headwinds that slow down mobility are only growing stronger,” he wrote.

“I’m confident Queensland will play a massive role in Australia’s future economic success, just as we have in the past. And I’m confident that Queensland resources will too—because as we make the transition to a net-zero future, our natural resources will become more important, not less.”

Resources Sector Key to May Budget

On Jan. 12, Chalmers said the May budget would be used to mitigate entrenched disadvantages across the country, with the mining resources sector being a key component to achieving that goal.

“Queensland can help power the country with its solar, wind and hydrogen—and help make the clean energy technologies the world needs with its bauxite, copper and nickel,” Chalmers said.

A general view of the mining town of Mount Isa in the Australian outback in Queensland. (Nick Laham/Getty Images)

“And through all of that, there are huge opportunities to create new, high-skill jobs up and along the value chain—through processing, refining and manufacturing.”

He added that while every generation can do better than the previous one and that where a person starts in life should not determine how high they can climb, this isn’t the case all Australians.

“We need to do more and work harder to change that—and in 2023, we will,” he said.

Climate-Related Measures

Meanwhile, Chalmers has proposed a standardised internationally-aligned form for the “disclosure of climate-related financial risks and opportunities in Australia.”

“This includes both the physical risks of climate change and the transition risks associated with policy, regulatory and technological change brought on by efforts to mitigate climate change,” according to a consultation paper (pdf) published in December 2022.

Additionally, big emitters will be required to reduce their carbon emissions by almost 35 percent by 2030 under the federal government’s new safeguard mechanism reforms.

A smokestack emits fumes in Sydney, Australia, on June 2, 2007. (Ian Waldie/Getty Images)

The safeguard mechanism was introduced by the previous Coalition government and requires the 215 facilities that annually produce over 100,000 tonnes of greenhouse gases to limit their net emissions below a baseline limit.

Minister for Climate Change and Energy Chris Bowen said the reforms will support the country’s biggest emitters to remain competitive in a global economy while they work to reduce emissions.

Chalmers Confident Australia Will Avoid Recession

Chalmers said he was confident that the country could avoid a recession despite pessimistic predictions by the International Monetary Fund and World Bank for the global economy in 2023.

“We’ve got a lot of things going for us in Australia—low unemployment, the beginning of wages growth, good prices for what we sell the world,” Chalmers said.

Speaking on ABC radio, Chalmers said that Australia’s economy will be determined by interest rates, the future of the Ukraine war, as well as China’s continued battle with COVID-19.

“What’s happening in China is a big part of the story, but (so is) a war in Ukraine, obviously the prospects for the U.S., UK and Europe and here at home the implications of the rate rises plus the uncertainty around natural disasters,” he said.

“Those are the five big things I think which will be the big determinants of how our economy fares in 2023.”

ANZ economist Adelaide Timbrell told AAP that the bank wasn’t forecasting a recession, but if inflation at the end of 2022 was higher than expected, it could put pressure on the Reserve Bank to lift interest rates again.

Weakening conditions are yet to appear in inflation readings, with the monthly consumer price index re-accelerating to 7.3 percent for November.

ANZ economists have downgraded their 2023 growth forecast from 1.8 percent annually to a 1.5 percent increase in GDP over the year.