ALTHOUGH Australia’s resource-reliant economy is feeling the pain of lower commodity prices, high construction and infrastructure costs, and falling investment, it is not right to say the mining boom is over. Such statements are not conducive to encouraging a turnaround in fortunes and, if anything, create more doom and gloom than warranted.

There is no question global mining is in a downturn and this time Australia’s mining industry is part of it, a situation exacerbated this year by high labour costs, retrograde government policies and a high Australian dollar. However, the underlying fundamentals for strong resources demand are still there with Asia’s emerging economies still growing.

China’s growth has slowed from virtually unsustainable double figure levels to the mid to high single digits while its middle class continues to increase unabated, thus increasing demand for comfortable residential accommodation as well as consumer goods. So much global emphasis is placed on China’s growth that often the strong growth in India, Indonesia, the Philippines and other South East Asian nations is overlooked. Then there is also the growth of other emerging nations in Central Asia, the Middle East, Africa and Central and South America to consider. All this creates demand for mineral and energy resources.

Unfortunately, politicians and the mass media have done little to provide encouragement to a vital part of the Australian economy which has created a great deal of angst for the mining community, mining support industries and the wider Australian population. This has been noticeable at recent mining events, in particular the Diggers and Dealers event in Kalgoorlie, Western Australia, and AIMEX in Sydney. Crowds were down and a number of big players were noticeable by their absence with sales and investment much harder to attract than would normally be the case.

These negatives mean Australia is becoming less globally competitive and is decreasing as a desirable destination to do business. This trend has been seen in recent reports from The Fraser Institute and can be seen in the destination of funds raised on ASX increasing to 65% in 2013 for global projects. This is a key issue that needs to be addressed to ensure Australia has the future revenue streams required to fund projects, infrastructure and research for a more productive Australia. It will be forced to tackle onerous levels of government spending and regulation if it wants to boost productivity.

A change of government at Australia’s September 7 federal election has provided a much-needed boost for the country’s mining industry with the Coalition pledging to remove the Mineral Resource Rent Tax and the carbon tax. While this pledge is not sufficient alone to overcome the downturn, it has created a more optimistic environment which has resulted in an improving situation for miners listed on the ASX.

Also of importance to mining is the Australian dollar which fell in the June quarter, making resources a lot more affordable in overseas markets. The Australian dollar slumped 12% in the quarter, the biggest slide worldwide behind the Syrian pound, after holding above $1 from mid-June last year to May 9, the longest stretch above parity since it was freely floated in 1983. It has, however, risen since the election, which has put a bit of a dampener on the increased optimism.

Mining needs more good news to come its way at a local and global level. Encouragement has come from the fact that business investment in Australia rose during the June quarter as stronger mining spending outweighed a manufacturing decline. The Bureau of Statistics figures showed that capital spending increased 4% on the first quarter when it fell 4.1%. Moody’s Analytics economist Katrina Ell says the capital spending numbers confirm mining investment isn’t headed for a sharp decline in coming quarters. “It’s good news for the broader economy.” HSBC chief economist Paul Bloxham says the figures are positive. “They confirm that mining investment is set to plateau, not plummet in the coming year.”