Newspapers getting it wrong on the never smooth resources boom: Terry Ryder

Writing about the Australian economy and in particular the resources sector is way too important to be left to newspaper journalists. Somebody competent should be doing it.  

Not a day goes by without an over-rated hack with "editor" in his or her byline - economics editor, small business editor, deputy resources editor, acting deputy rural editor - declaring the resources boom to be over.  

A total of 73 mining, gas and infrastructure projects costing $268 billion are under construction but, according to nine out of 10 journalists who misquoted the Bureau of Resources and Energy Economics, this constitutes the end of the boom.  

Imagine how big it was before it finished.  

Are we so desensitised by the numbers attached to mega projects that proliferate in this country that $268 billion in investment is interpreted as a slump?  

Of course, the BREE report did not declare the end of the resources boom, as many print journalists so dishonestly claimed. When a journalist for The West Australian, Shane Wright, wrote "The resources investment boom is over, a new report has found" he was being inaccurate. That wasn't the finding of the BREE report, it was Wright's own spin on the report content, for the sake of a cheap headline.  

He also stated, inaccurately, that the "figures show for the first time since the boom began that the value of new mining and energy projects is falling". This ignores events around 2008 when the GFC caused many resources projects to be deferred or scrapped. Many journos declared the end of the resources boom then as well - not to mention myriad predictions of recession and double-digit unemployment.  

But, despite the global economic calamity, the resources sector bounced back, stronger than ever. And will do so again.  

The basic message in the BREE report is that an unprecedented $394 billion has been spent developing 390 resources projects since 2003. The great bulk of that is the $268 billion invested in projects currently still under construction.  

Based on the current status of known projects, this will drop to $256 billion by the end of the end and then to $248 billion in 2014.  

If no new projects are announced, and if none of the projects currently rated as "deferred" came back on line, investment will be about $70 billion in 2017.  

A couple of things about that. The $70 billion figure is where things were at in 2007, when it was considered to represent the mother of all booms amid a raging national economy. We've become a little blasé about the enormity of the numbers since.  

But that figure assumes no new events or no resuscitation of projects that have been sent back to the drawing board as mining companies seek to reduce costs - projects like the expansion of Olympic Dam, the Browse Basin gas project and expansion of port facilities at Port Hedland.  

I'm pretty sure that a lot more than $70 billion will be pouring into resources projects in 2017. So too is BREE. The fine detail in its report, overlooked by many journalists seduced by the opportunity to declare the boom over, suggests that 120,000 new jobs could be created in the resources sector in Queensland and New South Wales alone over the next 10 years.  

If all potential projects go ahead, another $270 billion will be invested, creating 80,000 jobs in construction and 40,000 in operation.  

BREE resource manager John Barber says: "The resources boom is progressing. We're turning that investment into projects that will deliver economic benefits such as jobs and revenue to Australian economy for years to come."  

Consulting group Wood Mackenzie has published an optimistic outlook for the resources sector, particularly for oil and gas. It says there is unprecedented spending in this sector and expects it to continue.  

"The outlook for the next three years confirms the strength of the Australian resources sector," it says.  

Wood Mackenzie's Gero Farruggio sees Australia's dominance in iron ore increasing, taking its share of global seaborne trade above 50% by 2016. He also says the resumption of deferred coal projects and the development of new projects will keep resources spending strong through to 2017.  

Wood Mackenzie sees investment in iron ore, gas and coal remaining high for at least the next three years.  

The resources cycle is never smooth but the current boom in Australia, which started a decade ago and has persisted despite the GFC and the fluctuations in commodities prices, will continue to drive the national economy and many of its property markets.

Terry Ryder is the founder of hotspotting.com.au