Australia Shakes Off Mining Collapse

The sun’s shining on the Australian economy despite a huge collapse in mining – one of the country’s industrial mainstays.

Mining companies have shut and jobs have gone, but the economy is resilient and bounces back from adversity.

Whether that is the result of luck or good political judgment depends on your point of view, but with 3% growth in the economy in such black times is a major achievement.

Growth was expected to come in around 2.8%, so the figure was ahead of forecasts.

On the back of that, the government is holding interest rates at 2% for at least another month – the 10th in a row and the Sydney ASX jumped 1.5% on the feel good factor.

Low inflation and interest rates

Inflation is low, says Australian Reserve Bank governor Glenn Stevens, and if the cost of living stays down, the country has more than a reasonable prospect of more growth.

Part of the reason for Australia’s economic success is economic diversity.

Many commodity producing countries place all their economic eggs in one basket and stand or fall by the market price which is beyond their control.

The current oil crisis for the Middle East and Russia is an example. Prices plunged and the massive oil incomes slowed to a trickle, leaving the governments with massive holes punched in their budgets.

Not so Australia, the economy is much more diversified and is not solely reliant on mining.

Technology, financial services, technology and university education attract investment and customers.

Tax breaks for start ups

Tourism is also a big pull attracting visitors from all over the world.

Even the falling Australian dollar has worked out well for the Canberra government, making Australian exports cheaper against a range of other world currencies.

The government is not sitting still and basking in self-congratulation.

The benefits of tax breaks for start-ups along the lines of the British Seed Enterprise Investment Scheme have already been noted from afar and introduced in Australia.

The aim is to encourage entrepreneurs to start up their own businesses, and as those business grow, the economy will see more jobs created.

Watch BBC video on pushing agriculture in Australia