The West

The $12 billion Oakajee port and rail project may be on hold but it will eventually be built, Federal Resources Minister Martin Ferguson has declared.

But it may require a concerted effort by business management, unions and governments to get on top of costs to enable projects such as Oakajee to go ahead.

WA's Mid West mining sector suffered a blow this month when Japanese giant Mitsubishi put the project on hold indefinitely.

Mr Ferguson said Oakajee, along with BHP Billiton's $20 billion Olympic Dam project in South Australia, had faltered for a number of reasons.

But that did not mean it would be lost for ever.

"They're good projects and at some point they'll come back," he told ABC television.

Several other big projects and some smaller ones have also been dropped or delayed.

Mr Ferguson said mining companies, construction firms, unions and governments had all got used to high commodity prices and allowed costs to escalate.

Getting those costs under control now would give Australia a chance to build on the more than $250 billion of resources projects now under way.

A continued slowdown in the resources sector would be a further hit to the income of all Australians.

Bank of America senior economist Saul Eslake said one of the reasons the overall economy had failed to ignite off the back of recent cuts in official interest rates was lower incomes.

He said Australian incomes were likely to face a permanent slowdown that would feed into a slower pick-up in housing prices.

"The last decade was characterised by strong household income growth via steady growth in wages, repeated income tax cuts and a structural increase in the participation rate - all pushing house prices higher," he said.

"Without the support of the above factors, we expect that future household income growth will slow to an average of 4 per cent per annum compared with 7 per cent over the last decade."

The West Australian

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