A Harvard study ranking Australia’s economy as less sophisticated than Uganda and Kazakhstan is wrong because mining is not a ‘crude dig it up’ sector, the Productivity Commission boss says.
A popular study cited by the government that ranks Australia as the 93rd most complex economy – behind Uganda and Kazakhstan – is obviously wrong due to the misguided “denigration of mining as a crude dig it up, stupid” sector, the outgoing Productivity Commission boss says.to argue for greater intervention, including manufacturing subsidies via the $15 billion National Reconstruction Fund, to diversify the economy beyond mining.
“Many of the other OECD economies in many ways have been less successful than Australia and have lower per capita incomes than Australia and haven’t had the same productivity performance over the last 30 years as Australia.” Australia’s terms of trade – export prices relative to import prices – recently hit a 200-year-high due to record prices for iron ore, coal and gas.However, former Treasury secretary Ken Henry has blamed the resources boom for causing chronically weak non-mining business investment.
Mining also poached capital and labour from other industries and pushed up costs, according to a speech Dr Henry made in March.
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