29th January 2010

CQUniversity professor John Rolfe says governments are better prepared for the next mining boom.

WHILE many businesses in Rockhampton industries are already paying between 25 and 30% more for staff than their Brisbane counterparts, things could get even tighter.

Costs are expected to climb when the next predicted coal boom hits CQ, bringing with it a new wave of pressures.

CQUniversity professor of regional economic development John Rolfe yesterday said he thought there would be more adjustment to wages in Rockhampton.

Professor Rolfe said as major projects in Gladstone and at Alpha came on line things would get tighter in centres like Gladstone, Mackay and Rockhampton.

The previous boom impacted on labour-intensive and semi-skilled industries across the region.

Professor Rolfe said it created a “Dutch Disease” situation.

“Dutch Disease is a commonly referenced issue and refers to the situation where rapid growth in one industry drives up the cost of labour and other factors of production,” Professor Rolfe said.

“When an industry grows really quickly it sucks a lot of labour and resources out of the economy.

“Other industries have their costs pushed up and for some that can make them unviable.”

He said the higher costs could be attributed to the fact local businesses were competing against the mining industry.

Industries impacted upon last time included agriculture, tourism and local government.

Professor Rolfe said governments were better prepared for the next boom and had to a large extent caught up with their planning.

He said they were well placed to improve the social infrastructure in mining towns, with education programs put in place to increase the skills of the current workforce.

Earlier this week Federal Training Participation Minister Mark Arbib was in Rockhampton urging businesses to take advantage of the financial assistance on offer to hire an apprentice.

The term Dutch Disease was coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of a large natural gas field in 1959, culminating in the world’s biggest public-private partnership, NV Nederlandse Gasunie, between Esso (now ExxonMobil), Shell and the Dutch government in 1963.

The theory purportedly explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector combined with moral fallout.

Source: Wikipedia

www.en.wikipedia.org/wiki/Resource_curse

www.en.wikipedia.org/wiki/Dutch_disease