The new Treasury Secretary Martin Parkinson is optimistic about the mining boom lasting about another decade barring global catastrophe.
He also conceded that the department’s failure to forecast the strength of the resources boom has resulted in the loss of reform opportunities under the Howard government.
Had the department not refused to believe that the increases in commodity prices would be sustained from 2003 the revenue forecasts would have been very different. The additional revenue would then have come in handy for planned reforms. Still thanks to Peter Costello’s best efforts about $ 314 billion of the money was spent, as per Dr Parkinson.
Dr Parkinson was testifying at a Senate estimates hearing when he said that the implication went far beyond getting the budget bottom line wrong. It also restricted the government from being forward looking and visionary and doing some of the things that it wanted to.
When questioned by Western Australian Liberal Mathias Cormann regarding Budget forecasts for the terms of trade, the new treasury boss said the Federal Treasury was being conservative in its assumptions of a gradual fall over the next 15 to 20 years.
He added that the national was about to enter a boom that would be propelled by high export prices and enhanced mining capacity in addition to a once in a century global realignment. Dr Parkinson felt that the boom would probably last decades and the mining industry will grow at the cost of the manufacturing industry.
He said that the mining projects were scheduled to last 20, 30, 40 and even 50 years and were unlikely to be knocked off course by short term disruptions. The commodities will be needed by emerging markets such as India and China and other countries that are improving the living standards for their people. He concluded that while short term volatility was to be expected the overall outcome was positive for the Australian economy.