The Australian economy has started its recovery from the impacts of the Covid-19 pandemic, recording economic growth of 3.3 per cent in latest quarterly figures published by the Australian Bureau of Statistics, but this due to any form of a ‘gas-led recovery’.
The latest quarterly GDP figures show the coal and gas sectors continuing to contract as the rest of the economy bounces back, emerging from recession as Australians spend money on hospitality and recreation.
The mining sector recorded a 1.7 per cent decline. The ABS pointed the finger at reduced global demand for coal and gas as the cause of the continued contraction of the mining sector, with a 3.9 per cent fall in oil and gas extraction, and a 3.7 per cent fall in coal mining driven by weak global demand. These falls had been partially offset by improvements in the production of metals, including iron ore, nickel and copper.
“Reduced demand for coal and LNG and falls in prices drove the fall. This result was reflected in falls in exports of these commodities,” the ABS said.
The mining sector was one of just two sectors monitored by the Australian Bureau of Statistics that saw a continued contraction in the third quarter of 2020, along with the agricultural sector, as the rest of the economy bounced back from the effects of the Covid-19 pandemic.
The result puts into question the Morrison government’s push for a gas-led recovery, with federal energy minister Angus Taylor telling an energy summit held just last week, that the gas sector had been a central factor in the government’s employment strategy.
“A gas-fired recovery is a key part of the Government’s JobMaker plan and central to a strong Australia as we recover from the coronavirus pandemic,” Taylor said.
“The Commonwealth Government is committed to Australia remaining as one of the top liquefied natural gas – LNG – exporters in the world.”
The Australia Institute’s climate and energy program director Richie Merzian said the latest GDP figures, and the ongoing contraction of the coal and gas sector demonstrated that the Morrison government had backed the wrong horse in advocating for a ‘gas-led recovery’.
“The strength of the recovery is not evenly spread across the whole economy. One sector, in particular, experienced continued contraction in the September quarter: the mining sector, where real value-added declined by 1.7% in the quarter, and is down by a cumulative 2.3% year-over-year,” Merzian said.
“In its analysis, the ABS highlighted the decline in demand for coal and LNG, and falling world prices for both commodities, as the key factors in the decline of both real value-added and operating surpluses in the mining sector.”
“These statistics cast great doubt on the Commonwealth government’s vision of a ‘gas-led’ recovery. Recovery is actually being led by public and private services (including hospitality, arts, and health care), and manufacturing. The gas industry is holding back recovery, not leading it.”
“Putting more of our national economic eggs in this basket, given the inevitable erosion of global demand and prices for all carbon-based fuels, would jeopardise our continued recovery from the pandemic,” Merzian added.
