Mining boom Pain Becomes a Threat to Disciplined Economic Policy

NEXT week will generate headlines about the economy growing again as our China-fuelled mining boom powers through the global financial turmoil generated out of the US and Europe.

But this won't ease the political pressures from the economy's slow lane, such as retrenched steel workers. It won't relieve the pressure on the Reserve Bank to go soft on interest rates or on Gillard Labor to let its budget surplus slide. And it will intensify the spotlight on Australia's policy complacency and productivity slump.

Wednesday's national accounts will show the economy partially recovering from Queensland's summer floods. These produced the economy's biggest quarterly contraction since the early 1990s recession. And environmental concerns mean it is taking longer to siphon the water out of the coalmines that now account for 5 per cent of the economy's output.  Read More

The Australian