Costello is changing his profession. Seems as though comedy is his forte
Commodity boom has peaked: Costello 1-November-06 by AAP
Australia's commodity boom has peaked, federal Treasurer Peter Costello says.
"I think we've reached a high point and I think prices are going to return to more normal levels," he told Fairfax.
"The increase in commodity prices, the mining boom that was the story of the last couple of years, I don't think will be the story of the next couple of years."
The boom has added more than $100 billion to revenue over the past four budgets, a bonus of 12 per cent a year, ANZ Bank chief economist Saul Eslake told Fairfax.
This has given the Government tremendous latitude to increase spending and hand out tax cuts.
But with a slackening in commodity prices, "government revenues will moderate", Mr Costello said.
This suggests the Government will be more constrained in next May's budget before an election due in the second half of the year.
Mr Costello said the end of the commodities boom would be one of three forces dragging down the rate of Australia's economic growth.
"In my assessment, if you put three factors together, the globe is probably moderating, we've seen the peak of commodities, and the drought is knocking growth, so I'm just saying that I have no expectation at all of a boom in the years ahead - we will have moderate growth."
He was supported in his statement by Prime Minister John Howard, who told reporters today that there had been a dip in the resources sector.
"Poor old treasurers. They always get accused of firing warning shots and everything," Mr Howard told reporters when asked on the wisdom of Mr Costello's statement.
"I think you should be a little kinder to treasurers than that. They have a very difficult job to do.
"I think what Peter was stating was the obvious and that is that the rise in commodity prices has flattened out and there has been a little bit of a retreat, not a big one.
"He was just stating the obvious and that's a very sensible thing for him to do.
"I've said this before, and I agree with him, that we've done wonderfully well and there's no reason why the resource sector shouldn't continue to make a very big contribution.
"But we have to understand that there has been a bit of a dip and that's important."
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