I love this guy! You tell ’em Terry! Go go!
With friends like Martin Ferguson, the federal government doesn’t need Tony Abbott.
Ferguson had the brain explosion of the year when he declared the end of the mining boom.
Even in modern times ruled by media sound bytes, this statement was so thoughtless and simplistic as to be irresponsible.
What was he thinking? Clearly he wasn’t thinking at all.
We live in a nation hamstrung by fear and uncertainty. In the minds of many people, Australia’s one major asset is the strength of its mining sector. Then along comes a senior federal minister and announces that even that is dead.
Ferguson’s performance highlighted the nation’s greatest weakness – the absence of strong, positive, talented leaders, the single biggest reason why consumer confidence is so low.
Ferguson’s brain fart was quickly followed by BHP Billiton’s announcement it was deferring implementation of major projects including the Port Hedland export port development and the expansion of the Olympic Dam mine.
The combination of the two statements, Ferguson’s and BHP’s, has converted the “mining boom is over” idea into fact for many observers. Writers are already pumping out articles that assume the resources party is finished.
I’ll repeat an earlier statement: Australia is not having a mining boom, it’s in the early stages of a resources revolution. The global pecking order is changing, with new growth nations rising in economic importance as former powers fade.
Nations with big populations and a desire to achieve the living standards we take for granted have embarked on urbanisation and industrialisation. These processes are long term and will extend many decades into the future.
A temporary slowdown in China’s growth rate (to a mere 7% to 8%) is a minor blip on the long-term radar screen. The tendency of our major newspapers to dumb things down has created the image that everything depends on China, ignoring the growing importance of other rising powers like India, South Korea, Malaysia, Indonesia, Taiwan, Vietnam, Thailand and others.
Australia is the quarry feeding these changes. We’re not far off the point where Australia will be the world’s leading supplier of gas, while our stocks of iron ore and coal are essential to the growth nations.
The only thing that has changed is that commodity prices have come off their peak – another short-term blip on the long-term radar.
They’re still building the $43 billion Gorgon gas project, the $29 billion Wheatstone venture and $70 billion worth of LNG projects centred on Gladstone.
BHP Billiton’s management may have had a panic attack, but Rio Tinto, Fortescue Metals and Hancock Prospecting are still powering ahead with their expansion programs.
Anyone whose vision extends beyond the 24-hour news cycle can see that Australia is caught up in events with very distant horizons. And that creates long-term opportunities for property investors.
The accommodation shortage that is pushing up rents and prices in Gladstone is as real today as it was when Ferguson momentarily forgot he was sitting in front of a radio microphone.
Port Hedland was bursting at the seams, with houses averaging more than $1 million and rents nudging $2,000, before BHP Billiton announced deferral of the harbour expansion, and it still is.
The emergence of the new Galilee Basin mining province, where one $6 billion coal project has just received federal approval and others of similar size are in planning, continues to make Emerald a place with almost zero residential vacancies.
Charter flights full of fly-in, fly-out workers are still clogging up airports in Perth, Brisbane, Adelaide and elsewhere.
Good luck to anyone trying to make a last-minute booking for a hotel room in Perth or a hire car in Gladstone.
My over-riding view has been that the best places to invest in Australia are regional centres, which benefit from the resources sector but do not depend on it, and it still is.
Terry Ryder is the founder of hotspotting.com.au and can be followed on Twitter.