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Western Australia’s economy has reaped rewards from the skills and capabilities built upon the resources sector. Now is the time to leverage these advantages into new sectors and markets.
Before COVID-19, with the WA economy sluggish after the mining downturn, focus finally turned to the need to future proof the economy. All the talk was of growing international tourism and education sectors.
COVID-19 and WA border closures brought this talk to a grinding halt. Paradoxically the lack of economic diversity appears to have positioned WA well. Witness the enviable position across economic, budgetary and health fronts. But the downside is an even less diversified economy both in terms of WA’s major export, iron ore, and WA’s major trading partner China. The Productivity Commission recently identified Australia’s iron ore export concentration in China as a vulnerability for both countries.
Other warning signals cannot be ignored. The State Budget showed WA services exports falling by 38 per cent in 2020-21, with further falls expected this year. Yes this is about COVID-19, but it underlines how much WA has relied on mining. So now is the time to take action to diversify WA’s economy and consolidate the strong economic position.
This is not about turning our back on strengths in mining or specific export markets. It is about building our currently small but promising sectors for future growth. This includes emerging resources sectors, such as hydrogen. But international education, tourism, agriculture and creative industries must have support to flourish. WA has a highly skilled knowledge economy, with strengths in large scale infrastructure delivery and export market development. Coupled with a high standard of living and a safe and secure business environment, WA should be a highly desirable investment destination.
Diversification does not just mean new industries. Diversification of markets should be firmly on the agenda. As trade tensions with China continue to simmer, we must build relationships with other markets for our products. We must not ignore the burgeoning middle classes on our doorstep, including Indonesia, Malaysia and Vietnam.
Government has a key role in promoting investment and economic diversification. Trade agreements and diplomatic relationships are key in opening to new markets. Invest and Trade WA plays an important role in promoting trade and investment enquiries, and the newly appointed WA Investment and Trade Commissioners will assist in key markets. Past CEDA board member John Langoulant is heading to Europe and the UK to drum up business as the new Agent-General.
Attractive migration settings are another area where we can market ourselves to global talent and the global relationships in trade and investment that they bring. As the pandemic bit, WA’s population increased - expats returned drawn to an enviable lifestyle and economic opportunities, Other states experienced the reverse. But now Queensland is benefiting from interstate migration while WA loses younger talent to Melbourne. To maintain growth, let’s focus on keeping our home grown talent and attracting skilled migrants. Support for industries that have borne the brunt of the COVID-19 pandemic, such as international education and tourism must continue, so they are able to bounce back when borders reopen.
WA’s economic future can be about more than mining, making the state more resilient and prosperous in future. There will be lessons for the rest of Australia from WA’s diversification experience as we build recovery after the pandemic. CEDA looks forward to advancing the discussion with Deputy Premier the Hon. Roger Cook MLA at CEDA’s More than mining: future-proofing WA’s economy event on 29 October.