earlier lunches in this series. the resources boom it is now well understood that the “ mining boom ” is shifting gear, and that we are entering a new phase. the story of the boom has always had three phases. 2 in the first phase, commodity prices rose to very high levels. as a result, australia ’ s terms of trade rose to levels not seen in a very long time. these prices had a hiatus in 2009 with the global downturn but resumed their upward trend quite quickly. see anika foundation. see stevens g ( 2012 ), “ producing prosperity ”, rba bulletin, december pp 81 – 87. bis central bankers ’ speeches in historical context, the high prices have been quite persistent. 3 this led to the second phase, in which resource producers ramped up their investment to take advantage of demand for raw materials, in particular iron ore and natural gas, and to a lesser extent coal. resource sector investment rose from an average of about 2 per cent of gdp, where it had spent most of the previous 50 years, to peak at about 8 per cent. that big rise is now over, and a fall is in prospect, with uncertain timing. it could be quite a big fall in due course. the third phase is now under way, in which we will see investment spending fall back, but a lift in volumes shipped of the various commodities. the latter has already started – for iron ore, volumes are rising at about 15 per cent per year – but shipments will probably increase further yet for some time and then stay high. shipments of natural gas will not start increasing strongly until 2015, and will probably have several years of very strong growth, and then remain high for a few decades. in that third phase, real gdp will get a lift. national income measured in current dollars will also get a lift from the higher volumes, but that is likely to be offset in part, at least, by lower prices. the lift in real gdp coming from this rise in exports will be driven more by higher output per person ; in fact, the level of employment needed to extract and ship the materials will be less than the level needed to build the capacity to do so. let ’ s be clear that australians will continue to benefit from the higher level of resources output for a very long time. there has been a large lift in the global demand for natural resources that our country happens to have in abundance. most people agree that the rate of growth of that demand will be lower

two decades, through the basel committee on banking supervision, to improve bank supervision and regulation. the revised capital accord, now almost fully developed, places much greater emphasis, implicitly and explicitly, on improved risk - management systems. all of this has the potential for placing even more responsibility on commercial banks for reducing both their own and systemic risk. most financial institutions will neither need nor be expected to achieve the complex risk - management practices required by the new basel accord for large, complex banking organizations, but their operations will not be unaffected. success, indeed survival, requires that we all adapt. the recent experience of the u. s. banking system suggests that it has begun to prepare itself for the task.