A new report has warned slowing investment in the mining sector could stagger the Australian economy after more than $30 billion of planned project were abandoned in the March quarter.
A private sector report from Deloitte Access Economics said the next nine largest projects waiting for approval in 2013 is no closer to getting the go-ahead, which could lead to a huge drop in projects if they do not get approval.
The report says the slowdown is like having Usian Bolt as the lead in a relay team, and passing the baton onto Homer Simpson, the The Daily Telegraph said.
Investment projects across the country fell by $24.7 billion in the first three months this year to $928.9 billion, DAE said in its latest Investment Monitor.
Mining investment is now only 0.8 per cent higher than a year ago, the Courier Mail reports.
The downturn resulted in a 6.2 per cent drop in the value of pipelined projects in the last three months after Woodside abandoned the nation’s largest project, its $43 billion LNG project in Western Australia.
The report is also pessimistic of the non-mining economy’s ability to pick up the investment baton as business confidence is low due to the high Australian dollar.
“The non-resources manufacturing investment has all but dried up in Australia, and there is no prospect of an investment resurgence at present, given the high Australian dollar and other competitiveness factors,” the report said.
“And non-residential building projects are showing little signs of life.”
Treasurer Wayne Swan conceded yesterday the investment slowdown, along with the high Australian dollar, will add to the government’s woes and unemployment could increase in the near future.
“There will be bumps along the way, especially in the labour market,” he said in a major speech.
“As over the last decade, our terms of trade have risen by more than 60 per cent, and resource investment has risen by 600 per cent.
“These massive economic adjustments we’ve been through have, at times, been painful, particularly for some sectors and communities.”
The slowdown in the non-mining sector has been so pronounced that mining investment pipeline is now three times that of the rest of the economy’s investment plan.
Five years ago, the two sectors were almost equal.
But in a Committee for Economic Development lunch in Melbourne yesterday, Swan ruled out curbing the strength of the Australian dollar, saying it would be a ‘folly in the extreme’.
This is in spite of its effect on company profits and government revenue.
He also rejected any plans for a Swiss-style intervention to cut down the strength of the Australian dollar by having the Reserve Bank buy up the currency.