Australia, The Emerging Economic Powerhouse

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    Economic Conditions and Prospects

    Glenn Stevens
    Governor

    Address to the Economic Society of Australia (Queensland) 2013 Business Luncheon
    Brisbane - 3 July 2013

    It is a great pleasure to be in Brisbane once again.

    Yesterday the Board, at its monthly meeting, left the cash rate unchanged.

    I don't propose to comment about yesterday's decision in particular, or to send any particular messages about the next decision.
    Instead I want to step back to look at the broader picture. The economy grew at about its long-term average rate in 2012, but more of that growth was in the first half of the year than the second. According to the latest national accounts, growth in real GDP has been running at an annualised pace of about 2½ per cent over the past three quarters. Our guess is that sub-trend growth will continue in the near term. Consistent with that, the rate of unemployment has tended to increase. Employment is growing – the number of jobs in the economy is at a record high – but not quite as fast as the supply of labour. :ranger:

    Over the past five years, the economy has expanded by about 13 per cent. The corresponding figure for the United States is 3 per cent. For Japan, the Euro area, and the United Kingdom, the figures are negative. :australia:

    Some of our Asian neighbours and trading partners have also done well, which has certainly helped us. Korea has recorded growth about the same as Australia's (13 per cent), Singapore more (about 18 per cent). And of course China's growth over this period has, despite frequent talk to the contrary, been rather stellar. Chinese GDP has risen by over 50 per cent since early 2008. China's growth over the past year or two has moderated, to be more like 7½ per cent, not the 10 per cent plus seen for some years. Most of the data we are seeing from China are consistent with that pace. This is what the Chinese authorities have been saying they want to achieve.

    It's worth noting that while Australia has done relatively well, the economy's average growth rate over the period since the financial crisis erupted in earnest has been only about 2½ per cent. In the preceding decade it had averaged almost 3½ per cent. That was a period in which the rate of unemployment declined from about 7½ per cent to just over 4 per cent. In contrast, the unemployment rate today, while still quite low by longer-run historical standards, at about 5½ per cent, is higher than it was. :ranger:

    There are a couple of points to make here. The first is that Australia's economy was overheating by 2008. Capacity was stretched as the resources sector was in the first phase of its investment build-up while household consumption was still growing briskly and credit growth was still in double digits by the end of 2007. Inflation rose, peaking at about 5 per cent. This was substantially due to domestic pressures, not just international ones (though they were not helping). These were all clear signs that we were not going to be able to keep growing at a pace like that seen in the decade up to 2008. The Reserve Bank had made this point many times, though it was not very popular. While inflation did subsequently abate, this experience showed that if there was to be a very large rise in resources sector activity, other sectors could not continue as they had been doing.

    The second observation is that similar declines in rates of growth have been observed in other countries – even the ones which have come through the financial crisis with relative success. Around our region, Korea, Taiwan, Singapore, Hong Kong, New Zealand and Malaysia, although navigating the crisis pretty well, have seen their growth rates decline by at least as much as Australia's. So Australia seems to be part of a broader pattern here. While we have benefitted a lot from China's ongoing emergence in this period, so have those countries.

    The fact that no country has managed to return to the sorts of growth seen prior to the crisis is highly suggestive that that growth was to some extent being driven by forces that could not be sustained. Perhaps this has to be a conditioning factor when we think about our own growth aspirations and the way we seek to achieve them.

    At this point, we have unemployment at about 5½ per cent, inflation ‘in the 2s’, the banking system is strong and government finances overall sound. Growth is on the slow side, inflation is low. That combination means that we have low interest rates (the lowest for fifty years in fact). Significant structural change is occurring, which is always challenging. But set in context, the macroeconomic data over recent years show a pretty respectable set of outcomes. Those who have memories of the 1970s or 1980s or the 1990s would surely recognise them as such.

    Now it has been said that we were ‘lucky’ to have the mining boom, the effect of China and so on. Otherwise, we would have seen much more economic weakness. It's hard to disagree with that proposition as a piece of arithmetic. As a piece of analysis, though, it is incomplete.

    It could equally be said that we were ‘lucky’ that the effects of the global economic downturn worked to help reduce inflation in Australia from its peak in 2008 of 5 per cent – which was way too high – to something acceptable. It could also be said that we were fortunate that the sub-prime crisis in the US emerged from early 2007, and not later. Although such lending was less prominent in Australia at that time, it was growing fast and would have become a much bigger vulnerability had it continued at that pace. The fact that things went wrong in the US when they did meant that what was a small problem here stayed small. It could be added that we were lucky that the change in behaviour of households – slower borrowing, more saving – came when it did. For a start, had households continued as they were, they would have become more financially extended, and it is obvious now that that would have been risky. Moreover, this changed behaviour of households has helped us absorb the resources investment boom. :ranger:

    Of course the story is not yet finished. We have to negotiate the downward phase of the investment boom over the next few years, which appears likely to pose significant challenges. How will we meet them?

    A good way to begin is to have a reasonable starting point, and we have a better starting point going into this episode than we might have had, or than we have had on other occasions. Had we followed the pattern of previous terms of trade booms, we would have had much more inflation, faster credit growth and more asset price inflation, and more excesses generally. And then, when the terms of trade began to fall, we would have been much more likely to have a very big slump. This was the case in the early 1950s, the mid 70s and the late 70s (Graph 1). In each case domestic excesses arose resulting both from flow-ons from high commodity prices with a fixed exchange rate and policy weaknesses, which then made the ensuing downturn worse.

    [​IMG]

    It hasn't been that way this time. On this occasion, the resources boom – a bigger one than anything seen for at least a century – was accommodated without a big rise in inflation, or a big run-up in leverage or an unsustainable asset price boom. In fact, for most of the past several years we have had various industries or regions complaining that they had not felt the benefits of the boom. There were actually positive spillovers. But the excesses were not as great as had been the case on other occasions.

    Quite evidently one major feature has been a flexible exchange rate, something Australia did not have in previous resources booms. The exchange rate played the role it is supposed to play when the country receives a large expansionary external shock: it rose. It has been correctly noted by other commentators that the real exchange rate has in recent times been at its highest since the float thirty years ago. Indeed, it has been just about as high as any time in the past century. In the broad that is not a total surprise, given that the terms of trade rise and ensuing increase in resources sector investment has been bigger than anything seen in a century (Graph 2).[1]

    [​IMG]

    Actually, the exchange rate might have been even higher but for the changes in behaviour by households, which have not returned to their earlier spending habits, instead maintaining a saving rate much more in line with longer-run historical norms. Corporations have tended to have a reasonably conservative mindset too, putting an emphasis on reducing debt and maintaining high levels of liquidity.

    Had they not done that, all other things equal, we would have had lower national saving, a larger ex ante gap between saving and investment, and a larger current account deficit. Interest rates would have been higher and the exchange rate presumably even higher than it was. Some largely non-traded business areas – retailing or real estate or banking – might have enjoyed an even longer period of households gearing up and spending. I conjecture that some other trade-exposed sectors would have had an even harder time than they did have. Moreover, we would, I think, have been more exposed to the effects of the decline in the terms of trade that we are now seeing.

    So the more ‘cautious’ or, more accurately, more prudent behaviour of households, together with some genuine caution by many firms, has been a force that has meant that Australia has accommodated a 100-year high in resource investment. Higher saving by the private sector has helped to ‘fund’ the resources investment boom at lower interest rates, and a lower exchange rate, than might have been the case otherwise. I am not convinced we should lament that performance as much as we seem to do.

    That is not to deny that, for many areas of the economy, the exchange rate has been ‘too high’ given the level of costs and productivity in place. But realistically, it is the nature of the shock we experienced that certain high cost or low productivity parts of the economy would struggle with the implications of a big rise in the terms of trade.

    In fact, I suspect that many sectors would still have struggled even if the exchange rate had not risen. At a 70c dollar, the resources companies would have had even higher expected profits and an even greater ability to bid for labour and capital. Inflation of wages and prices would have been higher, and in the scramble to keep up many of the same companies that have struggled in recent times would still have struggled. Admittedly, higher inflation might have concealed the problems to some extent, since everyone's nominal revenues would have risen faster, but only for a while. In the end, relative prices had shifted and, at any exchange rate, some sectors were going to find that to their advantage and others to their disadvantage. Moreover, taking the inflationary route would have left a much bigger legacy of problems to come home to roost as the resources boom matured.

    That said, the exchange rate was somewhat too high for a period. It is no secret that I, for one, have been surprised that the foreign exchange market has taken as long as it has to reflect the fact that the terms of trade peaked some time ago – nearly two years ago, in fact. In the end, though, market-based exchange rates do eventually adjust – and usually in a less disruptive way than those that are maintained artificially. A flexible exchange rate is an important part of adjustment over all phases of the cycle and it remains a major advantage that we have one. If the economy ‘needs’ a lower exchange rate, it will probably get it.

    So I would argue that, as we face the undoubted challenges of the decline in resources sector investment, our starting position is in several important respects a better one than we have usually had at this point of previous episodes of this kind.

    Still, a starting point is just that. It is understandable, as we go into this phase, that people will ask ‘where will the growth come from?’ The conventional discussion at present has turned its attention to just this question. Not so long ago people were worried that there were no positive spillovers of the boom, or that there were even, in net terms, adverse effects. Some almost seemed to feel that it would have been better if there had never been a boom. Now suddenly people are worried that there were positive spillovers from the boom after all and that their absence or reversal will be disastrous.

    The question of where will the growth come from is one that recurs periodically at moments of uncertainty. Twenty years ago there was an almost despairing pessimism about economic prospects in the wake of what was admittedly a pretty big recession. It was thought likely by many observers that unemployment, then in double digits, would remain so for a long time.[2] In fact, as we now know, we were on the cusp of two decades of good economic performance, at the end of which our country's relative standing for economic management would have improved out of sight. Who predicted that?

    Moreover, areas of the economy that we often don't think about have proven to be major drivers of – and participants in – that growth. Over the 21 years to mid 2012, real GDP rose by about 100 per cent. Only 3 percentage points of that 100 per cent came from manufacturing. The largest contributions came from financial services (13 percentage points), mining (10 percentage points), construction (9 percentage points), professional services (8 percentage points) and health care (7 percentage points). The number of jobs in the economy has increased by around 50 per cent over the same period, with around two-thirds of this increase attributable to household and business services of various kinds. Within these sectors, health care (around 9 percentage points) and professional services (around 7 percentage points) have made particularly notable contributions.

    In other words, most of the time the answer to the question ‘where will the growth come from’ is that only part of it will come from the old traditional areas, and a fair bit of it will come from new things, often things of which we are only dimly aware. That is, in fact, the nature of a dynamic, evolving economy.

    Turning to the current conjuncture, it can be observed, in conventional expenditure accounting terms, that some key areas are well placed to expand once they have the confidence to do so. Non-mining business investment, for example, as a share of GDP has been unusually weak – it is not much above its recession lows of the early 1990s. Many companies, rather than extending themselves, have been financially conservative over recent years and are sitting on very substantial sums of cash. It's hard to believe that this configuration will not change at some point over the next few years.

    Likewise, dwelling investment has been low for an unusually long period, with at least some households intent on reducing debt, thereby strengthening balance sheets. Households have accumulated a good deal of cash as well over recent years. Meanwhile, population growth is quite solid and it has been picking up a bit of late. If anything, we will need to build more dwellings than we have been over recent years. Meanwhile, interest rates are low, dwellings are more ‘affordable’, and finance approvals for housing purchases have risen by 16 per cent over the past year. So there are ‘fundamentals’ that favour a pick-up in these sectors.

    Of course, we have to add two things. The first is that no-one can pretend to be able to fine tune this ‘handover’, to guarantee that the non-resources sectors strengthen, on cue, by just the right amount. We have, in fact, had a few handovers over the past five years – from private demand to public in 2009, then to mining investment subsequently. Now we are looking back to household dwelling spending, non-mining investment (and exports). Previous handovers have occurred, largely successfully. That doesn't guarantee the next one will, though it does mean that we shouldn't assume that it won't occur.

    The second thing to say is that much depends on ‘confidence’ – that intangible thing that is hard to measure and very hard to increase. We are talking here about confidence that the future will be characterised by growth, that there will be customers for products, that innovations are worth a try, and so on. That confidence seems pretty subdued right now.

    To the extent that subdued animal spirits reflect global issues, which they must to some degree, there is not a great deal we can do about it beyond tending to our own national affairs as diligently as possible.

    More generally, while there are various ways policy measures can damage confidence, there is no simple policy lever that can be quickly pulled to improve it. Rather, confidence-enhancing conduct of policy involves having well-established and understood frameworks, and acting consistently with those frameworks over time.

    The Reserve Bank, for its part, has a well-established monetary policy framework. Guided by this, we will be able to continue to do our part, consistent with our mandate, to assist the transition in sources of demand that is needed. We cannot fine-tune it – no-one can promise that – but we will do what can reasonably be done.

    The conduct of other policies likewise needs to be principled and consistent. Notwithstanding the difficulties of achieving a budget surplus in any particular year, which will always be hostage to what happens in the economy and the vagaries of forecasting, there remains a strong commitment to fiscal responsibility in Australia across both sides of politics, even if there are different views about how to achieve it. The importance of that commitment will, if anything, be heightened in the future, given that significant challenges exist over the medium term in funding government initiatives that the community appears to want.

    Consistency in other areas that have a bearing on costs and productivity is also important. My assessment is that at the level of enterprises, efforts to improve productivity have been stepped up under the pressure of the high exchange rate and structural change. But we should still be asking whether there are things in the way of faster improvement. Is the combination of regulatory structures of various kinds – however well-meaning and valid in their own terms – imposing unnecessary and excessive costs of compliance, or creating undue complexity for business?

    At a previous presentation in Queensland, when asked about this, I made reference to the Productivity Commission's ‘list’. The list is a substantial one. The good side of that is that there are many things that can be done to foster the improvement in living standards we all seek.

    Conclusion

    We have continued to live in interesting times. Major challenges have been faced, but significant ones lie ahead. No-one can pretend that things will be simple and easy. But, by the same token, prudent policies, within the right frameworks and coupled with private initiative responding to the right signals, can – if we are prepared to accept their requirements – provide Australians with reasons for confidence about the future. :thumb:

    RBA: Speech- Economic Conditions and Prospects
     
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    Australia gets mixed scorecard for global innovation
    Oct 10, 2013

    Hi-tech exports weak spot.

    Australia has missed out on a top ten ranking for information technology factors and related areas, according to a global innovation index that looked at 84 different indicators in 142 economies to determine which was the most innovative.

    South Korea, Singapore, Hong Kong, the Netherlands and United Kingdom took the top five spots in the GIobal Innovation Index 2013 information and communication technologies ratings, followed by the United States, Germany, Sweden, Norway and Israel.

    Australia was at number 13 in the world, rated ahead of Denmark but behind Finland. New Zealand was ranked 21st. :ranger:

    On the information technology and communications side, Australia was said to be strong in online e-participation and creativity. Its knowledge workers and the number employed in knowledge intensive areas was also listed as a strength, along with local research and development and the number of top-level domains on the internet.

    However, GII 2013 found some of Australia's weaknesses included ICT areas such communications, computer and information services imports, and low high-tech and medium-high-tech outputs and exports.

    [​IMG]

    When it came to ICTs and business model creation, Australia didn't break into the top twenty at number 27 in the world, GII 2013 found; whereas Singapore, Ireland and Switzerland led the high-tech and medium-high-tech output rankings, Australia was way down in the charts at number 48.

    The rankings for Australia were worse for high-tech exports, where the country was beaten by New Zealand in the 59th spot, followed by Guatemala, Montenegro and the Republic of Moldova.

    Online creativity that counts generic and country-level domains, along with Wikipedia edits and YouTube uploads had Australia at number nine, before Hong Kong and after Sweden. Iceland was the top-rated country for online creativity, according to index.

    Globally, Australia was placed at number 19 in the complete GII 2013 rankings, with a score of 53.1 and a percentage rank of 18.4. This placed it ahead of France (52.8/56.0) but behind South Korea (53.3/33.3) and New Zealand (54.5/36.8).

    Last year, Australia was ranked at number 23 globally, and New Zealand at 13.

    Hong Kong, Singapore, New Zealand, South Korea and Australia were the top five countries in the South East Asia and Oceania region this year when all factors were included.

    The Global Innovation Index is published by Cornell University, the INSEAD Business School and the World Intellectual Property Organisation.

    Australia gets mixed scorecard for global innovation - Strategy - Business - News - iTnews.com.au
     
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    Rising cost of business sees nation slip on global competitiveness
    September 04, 2013

    THE rising cost of doing business in Australia has seen it slip further behind in a survey of global competitiveness.

    The World Economic Forum's global competitiveness report for 2013/14 sends Australia down one place to a ranking of 21, compared to the previous year. :ranger:

    Australian Industry Group chief economist Innes Willox said while Australia stacked up well in terms of infrastructure and education, there was further slippage in cost competitiveness.

    Out of 148 countries, Australia's labour market efficiency ranking fell to 54, from 13. :ranger:

    On flexibility on wage determinations Australia now ranks 135th, down from 123 last year, while on burden of government regulation it stands at 128, down from 96.

    Similarly, pay and productivity has fallen to 113 from 80, and the total tax rate ranking dropped to 109 from 106.

    "These results highlight the cost of doing business in Australia and the pressing need to improve key areas, including industrial relations, business regulation and company tax in order to lift our international competitiveness," Mr Willox said in a statement on Wednesday.

    However, the report also highlights some bright spots for Australia.

    The nation was first in both secondary education enrolment rates and legal rights, and second in the number of days it took to start a business.

    In the overall rankings, there was no change from last year with Switzerland first, Singapore second and Finland third.

    Cookies must be enabled. | The Australian
     
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    Australian manufacturing
    August 2013

    The Australian manufacturing industry generates $96.8 billion of value add each year, representing 8.7% of overall GDP.

    8.7%
    Contribution to GDP (FY10)

    $96.8 billion
    Industry value add (FY10)

    991,800
    Number of people employed (FY11)

    34%
    Share of total exports (FY11)

    86%
    Share of total imports (FY11)


    The Australian manufacturing sector makes a vital and significant contribution to the economy. The sector has been growing at an average annual rate of 0.9% since 2000 (in dollar terms), accounting for 8.7% of GDP. The sector also continues to be an important contributor to exports, accounting for around 34% of total exports.

    The manufacturing sector is a significant contributor towards overall employment, with almost 1 million people currently employed by the sector. However, employment is falling, largely due to labour productivity growth rates and significant falls in employment in the Textile, Clothing and Footwear industry since the late 1980s.

    The manufacturing sector has become increasingly integrated with global value chains, making it prone to fluctuations in global input costs and the Australian dollar. However, despite the current highs of the Australian dollar and the increasingly competitive nature of global manufacturing, the Australian manufacturing sector still accounted for 34% of total exports in 2011.

    Manufacturing is also the primary source of technological innovation. It has the highest expenditure on R&D (26% of the total in 2009, despite only representing around 9% of GDP).

    http://www.333group.com/docs/publications/13-03_manufacturing.pdf
     
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    Redefining manufacturing

    Redefining what it means to be a manufacturer.

    the decline of the Australian manufacturing sector has long been documented. Since 1974 manufacturing’s contribution to GDP has halved, declining from 17% to 8%. However, perceptions of the relative unimportance of Australian manufacturing amid the growing resources and services sector are overly simplistic. :ranger:

    Traditional manufacturing may be in a state of decline. But a new approach to manufacturing is evolving. One which centres around innovation and sells solutions rather than products, one which embraces mass commercialisation and personalisation and targets low volume, high value over high volume, low value. This new manufacturing thrives on business model innovation and positions itself in rich webs of relationships and knowledge flows. :truestory:

    To compete in a global changing landscape, Australian manufacturers must redefine themselves. The future of the Australian manufacturing sector will depend upon the readiness of manufacturers to seize the opportunity of innovation and harness emerging technologies to develop new and sustainable ways to remain competitive. :ranger:


    The Australian manufacturing sector makes a vital and significant contribution to the economy. The sector has been growing at an average annual rate of 0.9% since 2000 (in dollar terms), accounting for 8.7% of GDP. The sector also continues to be an important contributor to exports, accounting for around 34% of total exports. :thumb:

    The manufacturing sector is a significant contributor towards overall employment, with almost 1 million people currently employed by the sector. However, employment is falling, largely due to labour productivity growth rates and significant falls in employment in the Textile, Clothing and
    Footwear industry since the late 1980s.

    The manufacturing sector has become increasingly integrated with global value chains, making it prone to fluctuations in global input costs and the Australian dollar. However, despite the current highs of the Australian dollar and the increasingly competitive nature of global manufacturing, the Australian manufacturing sector still accounted for 34% of total exports in 2011. :truestory:

    Manufacturing is also the primary source of technological innovation. It has the highest expenditure on R&D (26% of the total in 2009, despite only representing around 9% of GDP). :thumb:

    http://www.333group.com/docs/publications/13-03_manufacturing.pdf
     
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    Mining boom continues as industry shifts phase
    11 November, 2013

    As the mining industry shifts from a construction phase into an era of production the resources sector will remain a strong driver of the Australian economy.

    According to a new report released by BIS Shrapnel, despite a fall in mining commodities and investment over the past year which has seen 1000's of jobs cut and production scaled back, the industry will continue to be a positive force on Australia's economy over the next five years.

    The report, entitled Mining in Australia 2013 to 2028, states mining investment, production, contractor services, and employment will all follow every different paths over the next five years.
    [​IMG]
    :thumb:

    It outlined that the ramp-up phase, which saw frenetic activity in the contractor construction industry to support the boom, has finished and is expected to decline by 20 per cent over the next five years.

    However it went on to state that mining production and extraction is set to grow by 41 per cent over the same period, in turn driving increases in mining activity, maintenance, and export. :thumb:

    "With respect to the mining boom, it’s probably fair to say that this is not the beginning of the end, but the end of the beginning" Adrian Hart, Senior Manager of BIS Shrapnel’s Infrastructure and Mining Unit said.

    Hart previously forecast the end of the mining construction boom in 2015.

    "Over the next five years, the strong boost from mining production, led by LNG and iron ore, will more than offset the economic negatives from falling mining investment which will flow through to construction and manufacturing. Consequently, BIS Shrapnel is forecasting mining activity as a share of GDP to rise from 18.7 per cent to 19.8 per cent; Australia becomes a more mining-focused economy from here." :ranger:
    [​IMG]
    Despite this predicted growth mining employment is not predicted to grow in line with development, as miners focus on productivity and efficiency that was lost amongst the race to be the biggest during the boom.

    In an interview with Schneider Electric,their solutions vice president for mining, minerals and metals Diego Areces told Australian Mining "in the past miners focused simply on being the biggest of the lot, but now this has changed; they are focusing on being the best, the most efficient, the most optimised". :truestory:
    [​IMG]
    Hart added that miners will continue to be squeezed by lower commodity prices and a high Australian dollar over the next few years".

    "As such, they are going to extraordinary lengths to cut back on the high costs / low productivity culture which characterised the construction phase of the boom. We expect that mining operations employment will rise only 11 per cent over the next five years,mainly in oil and gas and iron ore, whereas mining construction employment will slump 40 per cent. Given the strong increases in production expected, this translates to a 60 per cent labour productivity surge over the next five years."

    This focus on efficiency is expected to create both challenges and opportunities for the METS sector.

    The METS sector is estimated to be worth over $90 billion dollars and directly employs more people than the mining sector; with the last count coming in at 386,000 people.

    "The METS sector represents the mining jobs of the future," METS advocate and former Queensland Premier Peter Beattie said at a recent industry event.

    "This sector will create the dynamic, high tech, highly innovative jobs that are needed to engage those young people and ensure continued employment growth for generations to come." :thumb:

    However Hart added that those who operate to the margins set by the boom are likely to be hurt more than others.

    "High cost / high service contractors to the mining sector are currently facing the brunt of the adjustment. There is still a lot of work, but it is either being redirected in-house or to lower-cost suppliers. While this is not expected to be a permanent shift,contractors need to navigate region by region, and sector by sector, to identify opportunities opening up in operations, maintenance and facilities management to offset an aggregate decline in construction and development work."

    Mining boom continues as industry shifts phase | Mining Australia
     
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    How mining has shaped Western Australia
    14 JAN 2013
    UPDATED 10:48 AM - 26 AUG 2013

    Western Australia accounts for just over 10 per cent of the nation's population, but made up more than 45 per cent of national merchandise exports last year. :thumb:

    Western Australia accounts for just over 10 per cent of the nation's population, but contributed more than 45 per cent of the total national merchandise exports last financial year.

    Western Australia certainly punches above its weight when it comes to the economy, reports Ryan Emery.

    A new skyscraper along the Perth city skyline towers above the rest. It's occupied by the world's biggest miner: BHP Billiton. The company and its rival Rio Tinto have helped turn Western Australia into a resources powerhouse that's led to a population boom.

    “It is significant that over the last 12 months that nearly all of the new jobs in Australia have actually been in Western Australia,” says WA premier Colin Barnett. “Other states have seen employment fall and in this state it's risen by nearly 70,000 new jobs.” :truestory:

    In 2011 the state produced 488 million tonnes - a quarter of the world's iron ore.:australia: Overall the resource sector was worth $106 billion last financial year, helping WA's economy grow by 6.7 per cent that year.

    The state's good fortunes are attracting over 1,500 people a week to Western Australia.

    “The growth in the sector in the last 10 years has been absolutely phenomenal,” says Nicole Roocke, director of WA's Chamber of Minerals & Energy.

    “We've seen increased numbers of women joining the sector, we've seen increased numbers of Indigenous people joining the sector. We've seen increased levels of community investment as well.” :thumb:

    FIFO WORKERS

    Josie Price's husband Rod, a plumber by trade, is one of the state's 116,000 people employed by the sector. He works on an iron ore mine in the north - eight days on and six days back home.

    It's a move that's doubled the family's income and helped with major home renovations.

    “It's been good. It hasn't created too much of an upheaval in our little family arrangement. We chat all the time. He's on an eight and six roster so every second weekend he's home,” she told SBS.

    Every week 58,000 workers fly to work from Perth airport to spend up to four weeks away.

    The demand is so great that the airport has built a new terminal.


    “It will predominantly service FIFO, regional services and cater for one million passengers a year on opening. That terminal can cater for two million people so there is capacity,” says airport manager Fiona Lander.

    In Perth it is clear that mining has made an impact, with redevelopment on a massive scale. A new arena, hospitals under construction and even the Swan River is being transformed with a $440-million waterfront development.

    But the opposition says the government is spending too much. The state is a record $18 billion in debt.

    “Where that's gone, it's difficult to say, but the simple fact of the matter is that when the historical record is examined, you'll find that under Mr Barnett and this government, West Australians will pay for it for generations,” says opposition leader Mark McGowan.

    But the premier says health costs and less GST revenue is to blame. He sees a rosy future for the state with $200 billion of new or expanding resource projects underway or planned. :thumb:

    “I think for the next 10, 20 years you're going to see very strong growth in China and look people were predicting that these were poor times last year when Chinese growth dropped to seven per cent. Well, frankly seven per cent growth is still very strong,” Mr Barnett told SBS.

    And with a strong China comes a strong Western Australia.

    But not everyone is benefitting from the mining boom in WA.

    How mining has shaped Western Australia | SBS News
     

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