Inadequate taxes on mining means the people of Australia are being cheated and the economy is getting poorer, a Nobel Prize-winning economist told a crowd of 1400 people at The University of Queensland last night.
Professor Joseph Stiglitz shared his thoughts on the proposed mining tax in response to a question from an audience member during the seventh UQ Centenary oration.
"Natural resources lead to an appreciation of the currency and that leads to an imbalanced economy because it's hard for any other sector to do well, competing with imports or exporting," Professor Stiglitz said.
"You're selling off your assets and in many cases you're selling them off at a very low price.
"If you are taking resources out of the country and you are not reinvesting those resources in one way or another - a stabilisation fund, human capital, infrastructure - then your economy is getting poorer, not richer, and a good accounting framework can show that," he says.
"When you're taking out natural resources from an economy you ought to have a subtraction from GDP - a firm that held a resource and was selling it off would take off depreciation and that would show up in its books as depreciation."
During his oration on the sinking of the global economy, Professor Stiglitz said Australia had the shortest and the shallowest of economic downturns among the advanced industrial countries, thanks largely to a stimulus package that was "timely and one of the best designed in the world."
Professor Stiglitz warned that the economic crisis was not over yet and at best, the impact would be felt around the world until 2015.
A podcast of Professor Stiglitz's oration will be available soon from The University of Queensland's iTunesU.
Professor Stiglitz is touring Australia from 19 July to 7 August as the inaugural speaker for the Eminent Speaker Series hosted by the Economic Society of Australia.
He has held a string of highly-influential appointments, including Chief Economist and Senior Vice-President of the World Bank, and Chair of the United Nations' Commission of Experts on Reform of the International Financial and Monetary System.
Professor Stiglitz is also the University's inaugural Rodney Wylie Eminent Visiting Fellow, which was created in 2009 through a philanthropic gift from Mr John Wylie AM to honour his father, a well-respected University alumnus.
The University of Queensland's School of Economics and School of Business helped secure Professor Stiglitz as part of the Centenary Oration Series line-up.
Previous oration speakers have included the lead camera scientist on the Mars rover exploration, Professor Jim Bell, Director-General of UNESCO, Ms Irina Bokova and Indigenous leader and 2010 Young Australian of the Year finalist, Mr Jack Manning Bancroft.
The public can enjoy two more orations during UQ's Centenary year, with UQ graduate, and Chairman and CEO of The Dow Chemical Company, Dr Andrew Liveris, and UK-based cancer researcher, Professor Michael Stratton, planned for later in the year.
Professor Stiglitz's oration was broadcast on the ABC Big Ideas program. To watch the oration, please visit the website.
More information: www.uq.edu.au/centenary