After reading through yesterday's Australian Financial Review (AFR), The Australian, The Reckoning (online), and watching Business on ABC 24 through the week I have decided that 2015 is not going to be a year to look forward to. Not that 2014 was anything to write home about. But when you aggregate all the input floating to the top you get a pretty grey image of 2015.
Going through all the numbers mentioned in the papers I calculate conservatively that about 15,000 Western Australian's are going to be put off work in 2015 as a direct outcome of the end of the mining boom. What the downstream impact of these 15,000 losing their jobs is likely to be is hard to guess.
These 15,000 come from the end of a number of major capital works during 2015 and no new capital works (are now) planned; from direct mining activities as junior miners are taken over, shut down, or make huge cut backs and the big miners continue to reduce employee numbers; from the federal and state government sectors as they both execute planned cut backs; and from manufacturing as they react to the capital works and resource industry reductions.
So this is known—but working out the knock-on impact is a little harder. Like what will be the knock-on impact to the real estate market, the stock market, and the general retail spend (which is already down)? And some of these knock-on impacts are circular. As retail spend goes down then so does revenue to the State Government, who then react by having more cut-backs to people.
All this at a time when Australia is in more debt that it has ever been and despite all the efforts of the new Liberal government to reverse the debt burden it is still increasing. This means the government's ability to assist people in 2015 is very limited—unless they are prepared to go into bigger and bigger debt.
What we need is for iron ore to zoom back up to about $120 per tonne. But the 'experts' are pretty sure iron ore has not bottomed yet and is not going to recover to above $100 tonne for at least three years.