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PAX, LUX ET VERITAS SINCE 1965
Post Western Australia's Economy
Created by John Eipper on 04/04/12 2:45 AM

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Western Australia's Economy (Martin Storey, Australia, 04/04/12 2:45 am)

I add my thanks to Prof. Stephen Lamb and Henry Levin (3 April) for bringing counter-weight to my comments, and I agree with theirs: the economy in Western Australia is definitely two-speed, one is either somehow involved in the resources industry (and paid silly money), or not (and struggling on normal money). Prof. Lamb is right about my perspective; I find myself on the privileged side, although I am taking advantage of the circumstances to work less rather than earn more. I am not an expert observer of this country, having been here only a little over a decade (and I've not yet been to most capital cities of the East during that time), but I try to stay informed and pragmatic.

Small businesses cannot keep up with rising rent, young people cannot afford housing which has gone up by a factor of 3-4 in the past 8-10 years (in Australian dollars) or a factor of nearly 10 in US dollars. Traffic in Perth has become horrendous compared to what it was before 2003-2004 when the boom started, and more generally our governments are saving nothing and mortgaging the future several times over, economically as well as environmentally. It seems to me that Western Australia will go down in history as a textbook case of how not to manage an economic boom in a 21st-century developed country. There are other countries experiencing a resource-led boom just now, Brazil and Ghana for instance, and I hope for their sake that they manage the manna better than we do here.

A sharp decline of manufacturing triggered by a natural resource boom is famously called the "Dutch disease" (http://en.wikipedia.org/wiki/Dutch_disease ). It seems to me that, right here right now, other sectors are also in fast decline (although there may be other compounding factors): agricultural land goes fallow due to a shortage of willing farmers (possibly also due in part to climate change), and recently some main banks have declared historic profits promptly followed by large-scale retrenchments and service outsourcing (possibly also due in part to shameless greed). Both in and out of the resource sector, the bar is frequently lowered to let in people, young or otherwise, who are given an opportunity to go further, faster, with fewer foundations. This is a more insidious consequence of the boom, and I believe that we pay a somewhat intangible but still very real price for that too.

JE comments: I see a huge WAIS benefit of Western Australia's economic explosion--Martin Story is now working mostly from home, which means he'll be able to write us more!

I am grateful for Martin's reality check on the good times in WA.  It's a shame that the government doesn't have the foresight to invest now in infrastructure and the environment, as well as save for the "skinny cow" times that inevitably follow resource booms.  When blessed with prosperity, bureaucrats throughout history are never capable of admitting the party will eventually end.



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