If that sounds a bit grim consider what happened last week in the coal mining and iron ore industries where a combination of market forces and daft politics knocked the country’s economy down another peg.
Some of the latest events might seem disconnected but considered together there is a pattern which can either be seen as disturbing, or a great way to make a fortune by short-selling the Australian dollar.
The irony of that suggested currency-focused investment strategy is that the quicker the dollar drops back to the US48c it was in March, 2001, the quicker the country can start repairing the damage done during the boom.
Coal miners would certainly appreciate a US48c exchange rate because it would boost the local price for exported coal by close to 60%.
To see how that works start with last week’s $US67.80 per tonne price for thermal coal delivered into the renewed Japanese contract negotiated by Rio Tinto.
At the latest exchange rate of US76c that produces an Australian coal price of $A89.21/t. At an exchange rate of US48c the local price explodes to $A141.25/t.
There are problems with a low exchange rate such as higher inflation and higher costs for imported capital goods such as earthmoving equipment. There will also be fewer BMWs and Mercedes in management car parks and holidays will be taken closer to home.
However, on balance the sooner Australian can drive the exchange rate back to levels last seen 14 years ago the sooner the mining industry can lift itself out of a hole created by over-investment and political interference.
Both of those factors, over-investment and politics, were on full display last week in the coal and iron ore sectors with Atlas Iron a victim of too much production being delivered into a flooded market which has killed the price.
Coal was a victim in a political sense as a Senate inquiry into corporate tax avoidance took the bizarre step of quizzing India’s Adani Group which doesn’t actually do much in Australia, yet, and certainly doesn’t have a need to avoid tax.
The truth about Adani being summoned by the Senate is that the tax-avoidance inquiry had been hijacked by environmental crusaders who saw it as a way of winning air time and newspaper space for their campaign against coal.
Adani’s Carmichael thermal coal project in Queensland is a plum target for anti-coal forces but to use a Senate inquiry into tax to quiz a company which is yet to develop a project – let alone earn a profit– and be in a position to avoid tax (or even to pay it) is obscene.
That, however, is what happened in Canberra where the political climate remains sternly anti-mining and particularly anti-coal.
Away from Canberra there was a separate development which leads back to the original question (what is the purpose of Australia?) and that is a report that over the next five years Australia will suffer the world’s most dramatic surge in debt.
The source of the debt-boom report was the International Monetary Fund, a reasonably well-credentialed organisation, which criticised Australia for not saving during the years of the China boom and now facing a debt explosion to pay for political promises.
Perhaps it is only The Hog who can see how the dots are connected in this picture of a country indulging in self-harm to the point where its politicians attack its best industries, demands that mines close, and then wonder where the money has gone.
Coal, a few years ago, was Australia’s biggest export earner. Iron ore was last year’s top earner. Today they are fading stars, and not simply because of over-investment and excess supply being dumped on a slow-growing market.
The contributing factor is Australian politics which first set out during the years when Kevin Rudd was prime minister to whack coal and iron ore with a super tax and now seeks to drive the coal industry out of business by discouraging new investment and raising approval hurdles to an impossibly high level.
In time, reality will dawn that Australia actually has very few unique advantages over the wider Asia Pacific region and one of those is an abundance of minerals and energy.
For some reason which The Hog fails to comprehend the country’s politicians can’t see that Australia cannot compete in manufacturing against the low-wage countries of the region and cannot expect tourism and education exports to generate the required revenue.
Mining, in its many forms, is what pays Australia’s way in the world but it seems that a currency collapse, rising unemployment and a debt-servicing crisis might be required for some people to realise that.