Claims the mineral commodity boom yielded only minor benefits to Australia’s economy are refuted comprehensively by Professor Jonathan Pincus in a new Background Paper released today by the Minerals Council of Australia (MCA).

Professor Pincus from Adelaide University uncovers several flaws in the approach taken by John Edwards in Beyond the Boom (A Lowy Institute Paper, 2014). Edwards’ finding that the boom up to 2011-12 contributed no more than 3 per cent to Australia’s GDP was widely reported earlier this year.

Pincus concludes that “the benefits of the boom as estimated by Edwards should be scaled up considerably, by up to a factor of four”. His finding is based on a detailed examination of the Edwards approach and alternative methods, including the “trading gain” measure used by the Australian Bureau of Statistics (ABS) and other economists as well as modelling results from a recent Reserve Bank of Australia (RBA) Discussion Paper.

The income gain from the rise in the terms of trade between 2002-03 and 2011-12 is estimated at 14 per cent using the standard ABS national accounting approach, while the RBA paper by Peter Downes, Kevin Hanslow and Peter Tulip found the boom delivered growth in real per capita household income of 13 per cent over the period from 2001-02 to 2012-13 (Research Discussion Paper 2014-08). 

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