The Hunter’s long-term economic fortunes remain perilously linked to the boom and bust cycle of the mining industry, a parliamentary inquiry has been told.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
While surges in the thermal coal price can produce the equivalent of an economic sugar hit to the regional economy, the effects of a slight downturn are also felt far more acutely within the local economy than at a state or national level.
Economists are now concerned about the ongoing effect that the mining industry’s infamous ‘boom-bust’ cycle is having on regional economic sustainability.
A House of Representatives committee hearing recently held in Singleton was told the Hunter’s exposure to the industry produced marked differences in economic trends in the Hunter compared to NSW.
Hunter Research Foundation lead economist Anthea Bill told the hearing that a decline in global coal prices to about US$56 a tonne saw a 15 per cent decline in employment in the Hunter Region between September 2013 and March 2015.
This decline compared to a 1.1 per cent increase in employment across the state.
The bust phase was followed by a recovery phase – From March 2015 to July 2018 there was 20 per cent growth in employment in the Hunter balance verses 10 per cent in the state overall.
The hearing was held a week before 388 workers at Muswellbrook’s Mount Pleasant coal mine were sacked on December 21.
READ MORE:
Hunter Research Foundation director Will Rifkin said attempts to predict future boom and bust cycles had resulted in over and under investment in key infrastructure projects.
“We saw in the housing sector, when the coal prices peaked ... it was four years until rents peaked in Muswellbrook. When rents go up like that, people build more houses and when the houses aren’t occupied you get a significant drop in rents and that’s a good indicator for the boom and bust cycle occurring,” Professor Rifkin told the hearing.
“You also see, in youth unemployment, a much more volatile rate of unemployment: youth unemployment goes up and down much more dramatically than it does in the general community.”
The committee also heard that the prospect of lucrative mining industry jobs was a contributing factor to areas like the Hunter having fewer people in the 25-34 year-old age bracket with university degrees.
Professor Rifkin said this scenario potentially had long-term implications for the transition of people from the mining sector to other types of business when the mining industry went into decline.
“You also have ripple effects. When the mining sector’s doing well, you lose your tourism – places for tourists to stay. So there are issues about how you retain a solid industry.”
The economic effects of land use conflicts between mining, equine and viticulture industries was also discussed at the hearing.
The continued rally in global coal prices continues to underpin long-term optimism in the Hunter’s economic outlook.
The most recent Hunter Research Foundation economic indicators show Business confidence and household confidence have broadly trended upward together since December 2014. However, the gap between the two series have widened during the recent recovery period.
Upper Hunter Households have shown more caution in their confidence in the regional economy than the business sector.