The mining boom delivered Australians a once-in-a-century windfall. So how did we spend it?
New modelling published by the Reserve Bank shows the mining boom triggered a binge on new cars. Purchases of motor vehicles were 30 per cent higher than they otherwise would have been as a result of the boom. The boom has also underpinned a glut of spending on household items such as furniture, whitegoods, TVs, cameras and computers. Purchases in that category – called "durable goods" by economists – were 20 per cent higher than what would have been the case if there was no boom.
There are two main factors driving these trends. First, the boom boosted our incomes. The bank's modelling shows household disposable income per person was 13 per cent higher last year than if there had been no mining boom. Second, the surge in demand for Australian minerals pushed up the exchange rate, making imported goods such as cars, TVs and computers cheaper for local consumers.
The analysis shows the effects of the mining boom left motor vehicle prices more than 15 per cent lower than they otherwise would have been and prices for durable goods such as furniture, whitegoods and electronic gadgets about 11 per cent lower.
"We find that the mining boom has substantially increased Australian living standards," said the Reserve Bank research discussion paper, titled The Effect of the Mining Boom on the Australian Economy, written by economists Peter Downes, Kevin Anslow and Peter Tulip.
But we didn't just spend the boom windfall on cars and household gadgets. It drove a 20 per cent lift in food purchases and an 8 per cent boost in purchases of communications services, such as internet and telephone use, the paper says. The splurge on new cars meant we also spend more on running them – the Reserve Bank estimates purchases related to "operating of motor vehicles", mostly petrol, was about 5 per cent higher than it would have been without the boom.
The researchers found the boom has lowered unemployment by about 1.25 percentage points and that higher household income had stoked demand for housing. This has helped push up property values, although interest rates have also been higher than they otherwise would have been.
Renters have not fared so well out of the boom because it led to a substantial reduction in vacancy rates and a sharp rise in rents.
"Although high rents and house prices encourage housing construction, these effects are more than offset by higher interest rates after 2009 (relative to the counterfactual) ... which depressed dwelling investment," the paper said. "So despite strong demand, the supply of housing contracts, compounding the downward pressure on vacancies and upward pressure on rents."