Mining boom puts Australians in the money (News Feature)

By Sid Astbury Dec 24, 2010, 6:00 GMT

Sydney - Christmas shoppers stand three deep around the display cases at Tiffany's in Sydney, the queues for lobster are out the door at the famous fish market and big name bands are filling the city's stadiums despite the top dollar ticket prices.

Australians are in the money. Thanks to tripled prices for coal and iron ore, they are rolling in it.

How Did We Get So Rich? asked the Australian Financial Review in the headline of a feature article stuffed with amazing evidence of the nation's financial good fortune.

Over the past decade, per-capita economic output has outstripped Japan's and approached that of the United States. It has almost doubled to 42,280 Australian dollars (42,420 US dollars) from 21,770 Australian dollars.

When Sydney held its Olympics in 2000, the country had eight billionaires. Now it has 31. The average cost of an engagement ring has doubled to 15,000 Australian dollars.

This year, Australians will get through one bottle of French champagne for every seven people, a higher ratio than in the US, Germany, Italy and Japan. That is double the figure at the start of the decade.

The spending of the newly super-rich is astonishing. Mining mogul Clive Palmer, owner of several private jets, bought his daughter a 30-metre yacht costing 5.3 million Australian dollars for her 15th birthday this year.

And the extra affluence is not just affecting the rich.

'The grandparents of working people today wouldn't believe the lives of working-class people now,' said Dennis Glover, a researcher at the Per Capita think tank. 'Their living standards have gone up more in the last few decades than in the last five centuries.'

You see conspicuous consumption even at the fast-food chain McDonald's, where ordinary beefburgers are being upstaged by deluxe versions called Grand Angus and Mighty Angus, made with prime beef.

Clive Hamilton, author of a book about consumer trends titled Affluenza, said the tidal wave of money returning when bulk carriers dock in China, South Korea, India and Japan have given people a taste for the high life.

'The collapse of the demarcation between the rich, the middle class and the poor is associated with the scaling-up of desire for prestige brands,' Hamilton said.

And not just brands but the other trappings of wealth like private education, foreign holidays and display homes.

This year, a million more people will leave Australia on holiday than will arrive on vacation. An estimated 7 million overseas trips will be taken - the equivalent of 31 foreign jollies for every 100 Australian residents.

Some worry that the country's spendthrift travellers are taking money abroad that could be better spent at home.

'We're now 3 billion dollars in the red,' a worried Tourism Export Council chief Matthew Hingerty said. 'That's 3 billion dollars more that's leaving the country from travel as is coming in.'

But foreign earnings from other sectors remained strong as the economy has been turbocharged by Asian demand for minerals and has hardly been slowed by some of the highest interest rates around.

The terms of trade - the ratio between the relative value of exports and imports - are the best they have been in 60 years and have helped light the blue touchpaper under consumer demand.

'The Australian economy is the envy of the developed world,' Treasurer Wayne Swan boasted before going on to marvel at his handiwork in not only skirting the global recession but doing so while increasing welfare payments.

The reverse of what is happening elsewhere in the developed world is happening in Australia. Employers are worried about labour shortages and the attendant wage rises rather than cutting back payroll costs.

While central bankers elsewhere intervene to try to stop their currencies appreciating, Reserve Bank of Australia officials see merit in a rising local unit as a way of stamping out domestic inflation.

And rather than cutting spending, the government in Canberra has just set up the nation's biggest-ever public works scheme: a national fibre-optic cabling programme to bring superfast broadband to almost every home.

Read more about Australia Economics