Don't kill the boom, Mr Ferguson

Resources Minister Martin Ferguson has talked down his own portfolio with a knee-jerk response to BHP's Olympic Dam decision.

Is the mining boom over? Well, Martin Ferguson, the resources minister of our resources-dependent economy says so... and he's done an enormous disservice in postulating a theory that is possibly false and
definitely harmful.

Why on earth would Ferguson talk down his own portfolio? Even his own cabinet colleague, Finance Minister Penny Wong, could not let it pass, suggesting yesterday "the boom has got a long way to run".

Indeed the first question has to be: How do you define a boom?

Is a 5.2 per cent unemployment rate not good enough? BHP is still investing extravagantly in the Pilbara. Rio is looking for so many workers it has established a jobs hotline.

And that's before we get to the hottest part of the resources industry – the gas sector – which is enjoying extraordinary growth. The Wheatstone project in WA is looking for 6000 workers, the $50 billion worth of gas projects pencilled in for the Gladstone region in Queensland will see employment opportunities beyond compare in recent decades (even if all three projects do not come to pass).

Maybe it was these salient facts which propelled Minister Ferguson – a respected politician who has done his best with the debacle of the mining tax – to later clarify his original statement that the resources boom is over to a narrower claim that it is merely the "commodity price boom" which has come to an end.

But Ferguson can't put the toothpaste back in the tube, he has downgraded a sector which he is meant to champion.

Worse still, he has bolstered the hitherto debatable notion that sovereign risk is on the rise in Australia. Because when you add the mining tax, the carbon tax, and an FIRB review together with rash statements from key government figures about the end of the mining boom, you really do have a problem when it comes to winning against the rest of the world for investment dollars.

At the very least, fresh mining investment is now threatened, mining companies seeking IPOs or project finance will find it harder and property prices across the mining towns will be hit.

Crucially, confidence in a sector which has been in rude health has been rocked from the inside: First by BHP's decision to scrap what would have been the nation's biggest mining project at Olympic Dam and then second, by the inevitable ripple effect when the move is interpreted at the highest levels as a crescendo for wider activity.

Mitch Hooke, the chief executive of the Minerals Council of Australia, made the best of a bad situation after Ferguson's faux pas when he artfully suggested the minister had done the resources sector a favour with an "alarm bell against complacency".

Though maybe it is Jeff Immelt, the global chief executive of the conglomerate GE, who came closest in recent days to nailing the issue at the heart of an increasingly defeatist attitude among the nation's elite in the face of unrivalled riches. "Australia is the unhappiest successful country in the world," said Immelt. Ironically, he was speaking at a gas industry conference in Sydney.

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