RBA Governor Glen Stevens. Photo:www.abc.net.au

RBA Governor Glen Stevens. Photo:www.abc.net.au

Reserve Bank Governor Glen Stevens has gently goaded the government saying they should do more to explain how public services are paid for. This comes in the wake of a somewhat disappointing return from the recent resources boom.

The Federal Government is attempting to shift the Australian economy away from its reliance on the resources sector; and in some sense it is being helped by huge foreign investment.

The weaker than expected returns, from the resources boom, came about because of the massive foreign investment in our major resources companies. BHP, Rio Tinto and Glencore Xtrata have a large amount of foreign investment. This necessitates a significant portion of their profits are siphoned off to those investors. All this is fair enough, as exploration and extraction would be impossible without their investment.

The problem occurs when the public is focused on government spending at the expense of earning. The Australian public reads about the massive mining boom, they are told about the windfall in taxes reaped by the government in response to it, and then they see public works being cut – and it doesn’t add up.

Of the $284 billion invested in the Australian resources sector since 2003 half of that has come from overseas investors. This means that half of the profits made will be going overseas.

In some sense the government brings this confusion upon itself: In an effort to win public appeal they publish the whole figure, not the whole story.

About The Author

Someone you can depend on to respect you and care for your dog. Let me help you give your dog the life it deserves.

Leave a Reply

Your email address will not be published.