PRODUCTIVITY
The strong growth in Mining income in recent years might suggest that industry multifactor productivity (MFP) is also growing strongly. However, the estimates indicate otherwise. MFP, capital productivity and labour productivity indexes for this industry have been in decline since their last peak in 2000-01 (figure 4.1). Figure 4.1 shows the gross output based measure of MFP following a similar pattern to the value added based measure of MFP. The figure shows that the decline in MFP since 2000-01 using gross output is slower than the value added based measure of MFP. This is due to the relationship between gross output and value added that was discussed in Chapter 1.
Value added based MFP for Mining grew by 0.2% per year between 1985-86 and 2005-06, which is slower than market sector MFP growth for this period. However, as noted MFP growth for Mining has been negative since 2000-01. For the period prior to 2000-01 MFP growth for Mining was faster than market sector MFP growth.
The strong prices for commodities may have meant that less productive mines have become economically viable. The opening of these mines would reduce the average productivity of the industry.
4.1 Mining MFP, labour productivity and capital productivity, (2004-05 = 100)
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