ESTIMATION OF MINING MULTIFACTOR PRODUCTIVITY

Since productivity indicators and associated growth accounts are estimated in real terms, an index of the real natural resource input needs to be estimated for inclusion into the inputs mix. This index is based on the total sum of real service flows of energy resources. Figure 3 shows the real index of service flows from mineral and energy resources to be included into the mining industry production function.



Figure 3 shows that the growth in the real mineral and energy resources index was strongest in the first decade, averaging about 3.3% per annum. Since 2002 the index grew less strongly averaging 1% per annum. The main contributor to growth was iron ore, partly offset by a decline in the volume of petroleum products extracted. Petroleum products production peaked around 2000-01, with subsequent declines due to the influence of depletion of the individual wells or fields over time. For a more detailed description, see Topp et al (PC, 2008).

Figure 4 shows the various capital services shares and the mineral and energy resources shares with respect to modelled GOS. For example, the mineral and energy resources share is derivable from Table 2 as the return to non-produced asset plus resource depletion divided by modelled GOS. To facilitate aggregation across each type of capital asset, the capital income share is apportioned using the standard approach described in Chapter 19 of Australian System of National Accounts, Concepts, Sources and Methods (CSM) (cat. no. 5216.0). That is, the product of real productive capital stock and rental prices for each asset type divided by the sum total for all of capital.

On average, almost half of GOS is attributed to the mineral and energy resources share. This share peaked at around 54% at the height of the mining boom, driven by high commodity prices that have subsequently weakened since the global financial crisis. Since 2005-06, the weight attributable to non-dwelling construction (including ownership transfer costs) has increased significantly (to about 30% in 2012-13), reflecting the significant investment in new infrastructure in recent years.




A capital services index including mineral and energy resources has been estimated using the shares in Figure 4 to facilitate a comparison between the mining capital services index without mineral and energy resources, as published in Table 10 of the Estimates of Industry Multifactor Productivity, Figure 5 shows that the growth in mining capital services is reduced significantly by the inclusion of mineral and energy resources, from 10.1% average annual growth since 2003-04 to 4.5% average growth.



In turn the decline in the Mining MFP is also reduced significantly, from -5.8% on average annually to -2.2% annually since 2003-04. These results can be seen below in Figure 6.