Opinion
Issue No. 42 - August/September 2008
Mining won’t be enough: Ruthven
Economic prophet Phil Ruthven lived up to his doomsayer billing when he spoke in Adelaide at a Key Invest function recently.
In his Pain or Prosperity? The Road Ahead presentation, the IBISWorld founder and statistical seer threw a bucket of cold fact over the notion defence and mining booms will propel SA’s standard of living into the Australian front rank.
Phil trained as a food scientist. His economic epiphany came through examining food manufacturing records, where he began to see patterns which enabled him to predict supply and demand cycles with surprising accuracy. Translating his discovery to other fields led him to found IBIS Research Services in 1971.
Phil says SA has fundamental problems with industry mix which a temporary mining boom cannot fix. Far from expecting a long-lasting, epoch-making development, he thinks there is not enough time left in the current demand cycle for mining to establish itself as a dominant contributor to SA’s Gross State Product (GSP).
He says the WA experience “proves you can get rich in minerals” but with its enormous head start in resource development WA now earns 25% of GSP from mining while SA earns only 4%, which is unlikely to ramp up fast enough to take advantage of high commodity prices.
Phil says he would be “sad to see” SA pin its hopes and its capital on a transient mining boom, leaving important infrastructure flaws unattended.
“We have very little choice about where revenue comes from,” Phil explains, noting that in any state, 70% to 75% of GSP comes from predictable, essential operations needed to run any economy – such as retail, transport and distribution sectors.
“The only difference between states is how close they are to world’s best practice,” he says.
Deciding what to do with the remaining quarter of capacity is the tough ask.
Two or three decades ago the plot was clearer; SA had evident advantages in manufacturing and ag...
