ANY economy, national or local, that depends too heavily on a single industry sector for investment and jobs is asking for trouble.
Not that it usually happens by design.
In the Hunter, for example, state and federal government policies helped inflate the recent mining boom which also helped undermine other sectors of the economy. When labour prices soared thanks to the peaking boom, for example, some businesses could no longer compete for workers.
The rising dollar, driven up in part by the boom, hurt other industries while governments – locked into budgetcutting policies – exacerbated the problem by cutting public-sector jobs.
Worse, the NSW government under both major parties actively obstructed economic diversification in the Hunter, with one example being policies that some allege are aimed at stopping a container terminal at Newcastle.
Now the mining boom has faded and the global giants that run the coal industry in the Hunter are locked in a contest to cut costs and boost volumes.
Meanwhile the region is paying the price for shortsighted mismanagement from Sydney and Canberra.
Unemployment is hovering around 10 per cent for adults, with the rate among young people at least twice as bad.
It is, arguably, an economic blow that bears at least some comparison to the 1999 closure of the BHP steelworks.
So where is the government assistance that Hunter people should be entitled to expect?
In decades past the Hunter benefited from economic packages designed to assist the transition away from steelmaking. And that was during a period when the regional economy was probably more diverse than it is today.
Newcastle Lord Mayor Nuatali Nelmes is being perfectly reasonable in asking the federal government to put its money where its mouth is in the Hunter Region. Since the Prime Minister, noted coal industry advocate Tony Abbott, has seen fit to attack Newcastle City Council for daring to consider shifting investments away from fossil fuels and towards renewable energy, one might suppose he would be equally keen to help the city and region cushion the blow from the bust in his pet industry sector.
Banking giant Citigroup noted last week that: “on the demand side we think thermal coal is cyclically and structurally challenged and that current market conditions are likely to persist”, warning that the industry’s response to the slump was ‘‘optimistic and hopeful’’.
Mining will no doubt experience more booms and busts in the years ahead, but the Hunter can’t afford to be left with no economic plan when most pundits say coal will be in the doldrums for years.
The lord mayor is right to demand that governments help repair a regional economy that they helped to break.