The September Quarter National Accounts underline the crucial role mining exports continue to play in supporting economic growth in Australia.

Though sharp falls in iron ore and thermal coal prices have dampened nominal GDP, the growth in export volumes (particularly iron ore volumes which have risen 22 per cent over the last year) has ensured a strong contribution to real GDP growth from net exports.

Together, iron ore and coal exports account for 7.3 per cent of GDP. Australian mining businesses have increased market share in both commodities in recent years.

The ABS figures released today reveal that mining contributed positively to Australia’s economic growth in the September quarter. Further, the increase in gross value added by mining in the year to September 2014 was:

  • 19.4 per cent for iron ore mining;
  • 10.8 per cent for coal mining; and
  • 9.5 per cent for mining as a whole.

The Treasurer has noted today that: ‘Iron ore production in particular has picked up more strongly than expected at Budget time. However prices for iron ore and thermal coal, two of our biggest exports, have fallen dramatically in recent times.’

Falling prices for our two largest exports means that the terms of trade are becoming a major headwind to income growth. Further economic reform is therefore essential to restore budget sustainability and to boost Australia’s productivity and international competitiveness.

The Abbott Government’s abolition of the carbon tax and the mining tax, along with a number of regulatory and trade reforms, have provided tangible relief from policy-induced burdens not shared by our major competitors.

But further productivity-enhancing reforms are needed to restore Australia’s economy to the sort of growth needed to boost incomes and lower unemployment.

This is a challenge not just for the Australian Government, but for the Australian Parliament as a whole.

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