WA looks to beyond the boom
January 1st, 2015
WA’s decade-long mining boom is about to be replaced by jobs and wealth that will come from the State’s farms, its pristine beaches and its people.
A $600 billion investment in mining that made WA the nation’s wealthiest State is closing.
But WA Treasurer Mike Nahan and business and community groups believe the pessimism linked to the slowdown in mining ignores opportunities opening across the State.
The West Australian today starts a special series about the State’s and Perth’s prospects beyond the mining construction boom.
The past decade has transformed the State.
The economy is 80 per cent bigger, there are 700,000 more West Australians, wages have effectively doubled and many people have enjoyed a once-in-a-generation lift in wealth on the back of soaring house prices.
Yet consumer and corporate confidence is approaching levels not seen since the depths of the global financial crisis.
On some measures, confidence in WA is lower than it is across the European Union.
Dr Nahan, whose Budget has taken a huge hit from the fall in iron ore prices, said he was sceptical of confidence surveys.
Although there would be fewer construction jobs needed in mining over coming years, many of those workers would be absorbed into the expanding building sector.
Dr Nahan said the broader advantages of WA, aided by a falling Australian dollar, would open up other sectors that had taken an economic back seat through the mining boom.
“WA will become the world leader in mining services and these services will be exported to places like Africa and India,” he said.
“Broadacre agriculture will always be important in Western Australia but food production in cattle and other meat products, seafood, dairy products, fruit and vegetables and wine will find new markets in China, South-East Asia and India.
“As the Australian dollar drops against the US dollar, WA with its pristine beaches and unspoilt wilderness areas will be a very desirable tourist destination.”
Chamber of Commerce and Industry chief economist John Nicolaou said a State that had undergone an economic transition unparalleled in recent history faced challenges.
But that did not explain the “entrenched pessimism” that had permeated the top end of business and flowed through to ordinary shoppers across the State.
“The boom we had was simply not normal but there were too many who thought it was,” Mr Nicolaou said.
“In terms of confidence, I think it’s clear that we’ve overshot the mark. We’re ignoring the broader factors at play that will be to WA’s advantage over the coming years.”
Much of the fall in confidence and the bleak outlook is tied to the falling price of iron ore and Budget troubles hitting the State and Federal governments.
Though last week’s mid-year Budget update showed the WA Government facing its first deficit in 15 years, it did point to an improvement in employment and an overall lift in economic growth.
Part of that is because of the diversity of Perth and much of the State.
A recent special analysis by the Australian Bureau of Statistics found the city, because it has workers in everything from mining to retail to health care to professional services, is more diverse than centres such as Sydney or Melbourne.
Satterley Property Group chief executive Nigel Satterley said the end of the mining boom was eating into the income that had propped up parts of the economy for a long time.
There were signs of major over-building in the commercial sector with up to seven years supply of residential buildings four storeys or above likely.
Yet whingeing about these changes ignored opportunities such as those presented by recently signed free trade deals with China and South Korea, low interest rates and improving housing affordability.
“There’s no use complaining,” Mr Satterley said.
“It’s not going to get any worse or better.”