As per the Reserve Bank of Australia’s Deputy Governor, the mining boom has benefited more than just Western Australia and Queensland.
In his maiden speech Philip Lowe said that there was a link between the investment boom in remote regions of Australia to increased spending at cafes and restaurants in Melbourne and Sydney.
Dr Lowe was speaking to the Committee for Economic Development of Australia when he said that the high terms of trade had pushed up the Australian dollar. In turn, the prices Australians paid for many manufactured goods were, on average, no higher than they were a decade ago, despite average household incomes having increased by more than 60 per cent.
He added that the stable prices for many goods, combined with strong disposable income growth, meant there was more disposable income to be spent on services in the cities and towns far from where the resources boom was taking place. In other words the extra income generated by the mining sector was actually being spent in areas away from the immediate vicinity.
When asked if the mining boom would pass by leaving the economy hollow, Dr Lowe said that there was plausible cause to assume that the mining boom would be very long lasting. He said that the process of development of those very large and populous countries of Asia was going to take many, many decades and Australia had the resources to supply those needs over many decades. If that was the case, the Australian economy had to go through some structural adjustment and it would be quite long-lasting.