5204.0.55.010 - Information paper: Introduction of Mining Natural Resources into Australia’s Productivity Measures, 2012-13  
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PRODUCTIVITY GROWTH ACCOUNTS

Given the distinctly differing characteristics of mineral and energy resources to capital in the productive process, it is desirable to separately identify its contribution in the growth accounts. Accordingly, the service flows from mineral and energy resources enters the production function as a separate variable. The income share is based on the 'resource rent' (as described in Table 1 above) divided by a variant of mining total factor income equal to the modelled mining GOS plus COE.

The capital income share (including land) is estimated as the ratio of the return to produced assets plus COFC to the variant of mining total factor income. For hours worked and labour composition, the income share is represented by the ratio of COE to the variant of mining total factor income.

Table 3 presents the productivity growth account for mining with the inclusion of mineral and energy resources. This account weights the growth in each of the respective inputs by their income share, so that the weighted growth in inputs plus MFP equals growth in output. Average overall growth results for the last two decades are presented.

TABLE 3. MINING PRODUCTIVITY GROWTH ACCOUNTS
Contribution to output growth %
Output growth (GVA) %
Capital services of produced assets
Mineral & energy resources
Hours worked
Labour composition
MFP
10 year averages
1993-94 to 2002-03
3.52
1.19
0.87
0.20
0.12
1.14
2003-04 to 2012-13
4.44
4.13
0.41
2.10
0.02
-2.22


In the first decade ending 2002-03 output growth averaged 3.52%. About one third of this was represented by MFP of 1.14%. Capital services of produced assets contributed 1.19%, mineral and energy resources contributed 0.87%, hours worked contributed 0.20% and labour composition contributed 0.12%.

In the second decade, output growth strengthened to 4.44%. This growth was mostly due to strong capital services growth contributing 4.13%, reflecting the ramping up of new mining capital expenditure. The mining boom also attracted significant labour services: hours worked contributed 2.10% to output growth. Mineral and energy resources contributed 0.41%. The residual value of MFP was negative, contributing -2.22% on average. Care needs to be taken interpreting the negative MFP result, due to capital lags associated with investment in new infrastructure. For example, additional output associated with infrastructure upgrades may not be recorded until projects are completed and operational.