In the lead-up to that investment peak, growth in output, employment and wages in the resource sector (broadly defined to include those industries servicing it) was relatively strong. The boom in those industries led to strong economic conditions in the resource-rich states of Western Australia and Queensland.
The significant appreciation of the exchange rate provided a signal for labour and capital to be redistributed from the ‘other tradable’ sector towards the resource sector. As a result, the growth in investment, output, employment and wages was weak in the ‘other tradable’ sector.