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June 13, 2013
Tom Conley in his column Revisiting the banana republic and other familiar destinations at The Conversation highlights how Keating's argument against the resources as saviour view of long-term Australian prosperity was overpowered by the resources boom caused by China's economic development.
Australia has been lucky to be in a position to take advantage of China’s industrialisation and recent Asian economic exceptionalism in the face of a slow American recovery and continuing European crisis. Conley says:
China changed everything. Its voracious appetite for resources pumped up the prices Australia received for its exports – particularly coal and iron ore. Australians promptly forgot the warnings of the past, as resource wealth became the new reality masquerading as a permanent change...This boom has now peaked and Australia must now find new sources of growth.
He adds that with increased global supply and lower prices, it is likely that Australians will start worrying about Australia's dependence on resources once again. Any downturn in China and other Asian economies will now negatively affect Australia.
Where to now then? How can Australia wean itself off its reliance on resources? Conley doesn't say. All he say is that:
Australia’s historical vulnerability to declines in international resources demand is about to re-emerge, which will make economic management a difficult task after the September election.Things have been tough for the Rudd and Gillard governments, but they will be even tougher for an Abbott government constrained by their rhetoric of the dangers of public debt. Labor was helped by the investment revitalisation of the Chinese economy, but should they win the election, the Coalition will come into office at a time of Chinese economic consolidation and rebalancing.
He makes reference to the 1980s commentary about the end of the industrial revolution and touting the beginning of the information age, but says nothing about whether this would help Australia wean itself off its reliance on resources .
The great dream of Australian economic policy-makers is that the eventual rebalancing of the Chinese economy away from investment and exports towards consumption will boost Australian exports of services, agricultural products and advanced manufacturing. Fingers crossed then because China has a very difficult adjustment ahead of it.
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Everyone in the world knows Australia has done better than any other developed country after the global financial crisis, just not the right-wing ideologues like Judith Sloan, Adam Creighton and virtually everyone else at The Australian, who it seems are immune to statistical information and analysis related to events.