There’s little doubt the mining sector will underpin Australia’s economic growth and prosperity over the coming years, and hence it’s good to see mineral exploration rose 2.5% in December quarter 2010, and is getting back up near pre-GFC levels (as reported by the ABS today). Here’s the relevant ABS chart on mineral exploration expenditure:
In other economic news today, consumer confidence has declined and some economists are blaming the proposed carbon tax. The Australian reports:
PLANS for a carbon tax appear to have shaken consumer confidence, contributing to a slide in the latest Westpac-Melbourne Institute measure of consumer sentiment.
Pessimists now outnumber optimists in their outlook on family finances over the next 12 months for the first time since March 2009, when Australia risked falling into recession.
Westpac chief economist Bill Evans said the key factors behind the unexpectedly large fall in the index – down 2.4 per cent in March from a month earlier – seemed to be concerns over budget and tax issues, and petrol prices.
“While there is no specific evidence, we expect that the key negative for households … relates to the government’s commitment to introducing a price on carbon by July next year,” Mr Evans said.
Consumers may not need to worry about the carbon tax coming in next year, however. The Government is bleeding heavily over this issue, and it’s unclear whether it will be able to implement the carbon tax by mid-2012.
My gut feeling is that there’s less than a 50% chance of the carbon tax getting up. There are just too many random elements, including the rural independent MPs, who could withdraw their support for the Government, and the potential for a Labor leadership challenge, most likely from Bill Shorten, if the Government’s poll numbers don’t improve.
If the proposed carbon tax remains unpopular over the next few months, consumers may well come to conclude that it will never get up and think, right ho, let’s start spending again. Whatever happens, at least Australia has a robust mining sector that will keep the economy growing while the carbon tax uncertainty persists.