Boom and Bust: Where to Next For WA?
We are all familiar with the phrase 'don't put all your eggs in one basket', but for many years we thrived in spite of its warning. Industry, commerce, communities and indivduals thrived. Then the boom slowed. Now it has all but stopped and economists, academics and analysts from all over the country are picking at the carcas of the boom to understand how we can avoid making the same mistakes again.
It seems everyone has an opinion on the resources boom, and we've collected the very best for a full unpack of the boom that was and how it has affected everyone from the major players to regional communities, the public sector and policy.
Gap between rich and poor continues in Western Australia post-mining boom
Source: ABC Radio Perth, Emma Wayne
With the end of the mining boom in Western Australia, house prices and rentals have been falling — but the poorest people in the state are yet to see any benefit.
The signs of economic slowdown are everywhere.
Unemployment in Western Australia hit 6.9 per cent in November, the highest level since 2002. It has since fallen to 6.6 per cent.
Last quarter, personal insolvency rates jumped by 26 per cent, compared to just 1 per cent nationally.
In theory, low income earners who struggled with high housing prices during the boom should be better off now — but, in reality, they are not.
Associate Professor Rachel Ong studies the Western Australian economy at Curtin University and her research to date has found that those who did not benefit during the boom are not winning from the downturn either.
"If you look at an economic slowdown, you would expect the gap between the rich and poor to narrow," Dr Ong said.
"However, what we did find is that there is still a huge amount of income inequality and wealth inequality in the state.
"The wealthiest 20 per cent of WA households hold almost two-thirds of the state's total wealth.
"In contrast, the poorest 20 per cent of households hold less than 1 per cent of the state's total wealth."
Coffee is cheaper - that's it
When ABC Radio Perth asked listeners how the downturn was affecting them, most could see few positives.
Nicky: "The state wage freeze combined with loss of school bonus and rises in utilities has left me thousands of dollars much worse off financially than two years ago. Pub prices have finally dropped but I can't afford to go and I work full-time."
Shane: "It's not easy. I work six days a week and will be for a very long time to come just to keep on top of the bills. Interest rates have never been lower but the cost of living has never been higher. Every year everything is going up (except food) but my wages are not."
Siobhan: "I'm loving the fact rents are lowering and that there's more choice."
Kate: "Coffee is a tiny bit cheaper and the train is less crowded. That's about it."
Jobs 'less secure, not long term'
Dr Ong said the problem was that although housing affordability had eased, the labour market had also changed dramatically.
"Before the mining boom slowed down, a typical job was a full-time job with quite a lot of stability and it was much easier to get into long-term employment contracts," she said.
"We are seeing the labour market become much more precarious and unstable.
"We are seeing a growth in casual work and people having to potentially go from one contract to another over really short periods of time."
ABC Radio Perth listeners agreed.
Jacquie: "We are heading back east. Ten employers in five years is enough."
Maddy: "Work is hard to find."
Michael: "Wages have been slashed."
Western Australia provides a masterclass in what not to do with a resources boom
Source: Mark Beeson, The Conversation
It wouldn’t be too unkind to suggest that Western Australia is not considered as the national benchmark of sophisticated public policy. Indeed, the state has recently attracted much attention – and derision – for the way its policy making elite squandered the wealth generated by the resources boom.
True, we now have more sports facilities than you can poke a stick at, not to mention a major makeover of the city foreshore – albeit noticeably empty of the promised high profile developments that were supposed to succumb to its irresistible allure. But you can’t accuse the Barnett government of not having big ideas.
Funding them has been another issue. Quite how WA managed to emerge from the once in a lifetime mining boom with an estimated debt burden of $40 billion by 2020 and a projected budget deficit of $4 billion is one of the West’s great mysteries. Or not, if you bother to look at what happened to all the riches the boom generated.
How Western Australia is handling the end of the mining boom
Source: Richard Heaney, The Conversation
For many years Western Australia enjoyed solid economic growth, matched by business investment and an unemployment rate lower than the national average. But it’s been a couple of years since investment in the mining industry peaked, and it’s time to take stock.
The WA economy has performed well, considering the downturn that arose as the mining industry moved from a capital construction phase to a production phase. But this has soured recently, and unless something is done to address increasing unemployment, and decreasing participation rates and economic growth, tough times are ahead.
Most commentators remember the exceptional growth WA has seen over the last 10 years though the more recent news has not been so great. Indeed, WA has stood out among the Australian states with 10 year average compound growth in Gross State Product (GSP) of 5%to 2015-16. The next ranked state was the Northern Territory with growth rate of 3.9%.
But the memory of these strong growth numbers masks recent poor performance. The Western Australian economy posted a dismal 0.7% growth in GSP per capita in the year 2015-16, a number shared only with Queensland.
Poverty, social problems on rise in Perth as WA’s resources boom ends
Source: AAP, PerthNow
WA may have enjoyed the world’s greatest mining boom over the past decade, but for anyone who walks through Perth’s CBD, the sight of homeless and drug or alcohol-affected people suggests many missed out on those riches.
Unemployment has doubled from a decade ago to about 6 per cent, the number of children removed from their families and in protection has doubled in the past eight years and methamphetamine or ‘ice’ abuse leads the country.
For the state Labor Opposition leader Mark McGowan, this shows that now the economy had slowed, the extra revenue the state government enjoyed from the boom had not been spent properly to tackle social issues or create jobs for people.