NEW YORK, Sept 24 (Reuters) - Australian Foreign Minister Bob Carr, standing in for an ill Prime Minister Julia Gillard, tried on Monday to dispel the common notion that Australia’s economy is hostage to slackening growth in China, Asia’s largest economy.
In a speech written for Gillard, Carr said it would be too simplistic to say that a generation of Australians have experienced economic growth because of only commodity exports and price increases.
“Australia’s economy today is less reliant on our natural resources and our mining boom than you might believe,” Carr said, reading from the text.
“Mining employs 2 percent of Australians. In the next four years, we expect three times as many new jobs to be created in health care, social assistance, education and training as will be created in mining,” he told a luncheon co-sponsored by the Asia Society and the Economic Club of New York.
China is Australia’s most valuable export market, but the drop in demand has led to a severe decline in key commodity prices such as Iron ore.
The commodity boom has helped to shield Australia’s $1.4 trillion economy from the worst of the global financial crisis.
Spot iron ore prices have fallen 25 percent year to date, cutting into both profits of the miners as well as government tax receipts .
In fact, miner Fortescue Metals Group cut its planned investment spending for fiscal 2013 by $1.6 billion to $4.6 billion earlier this month.
Giant mining company BHP Billiton Ltd in August shelved a $20 billion copper and gold mine expansion in Australia, and last week put on hold a plan for a $3 billion coking coal mine.
Mining magnate Gina Rinehart and Australia’s richest woman added her frustration saying the country was becoming too expensive for mining companies and she could hire workers for less than $2 a day in Africa.
Gillard, at the time, denounced the statement saying it was not Australia’s way and that instead she supported “proper wages and decent working conditions.”
The demand for mining industry workers has offset the declining manufacturing sector. However mining employment fell for the first time in three years, a report earlier this month showed, highlighting the concerns of both industry and the government.
Carr reminded the audience that domestic consumption accounted for 55 percent of economic output and that investment in production of liquefied natural gas and education are examples of developing the base for more growth even as China slows.
He noted that currently, 70 percent of Australia’s liquefied natural gas exports go to Japan, but that the changing pattern of energy demand in developed Asian economies are creating new opportunities for exports.
In 2016, the Ichthys liquefied natural gas project in northern Australia is expected to start production in 2016, which Carr said would boost export income by $72 billion over the life of the project.
Australia’s GDP grew 0.6 percent in the second quarter, moderating from the previous quarter when it jumped an exceptional 1.4 percent. That left GDP up a brisk 3.7 percent compared with the second quarter of 2011.
China’s economy has slowed its robust pace of growth to a still-envious 7.6 percent year on year in the second quarter, its weakest pace in more than three years as domestic and foreign demand has dropped.
“We’re not leveraged against any one national economy - indeed the United States was the biggest source of investment in Australian resources in the past five years,” Carr said.
“And this investment is creating jobs and wealth now and building the capacity for the production boom which will follow. So the Australian economy is more than just mining.”