Diversifying Western Australia’s mining dependent economy could yield benefits for the state, a new report from Bankwest Curtin Economics Centre has found.
Western Australia’s average economic growth over the past 25 years has been 2.6 per cent a year. But while this compares to 1.8 per cent gross domestic product (GDP), WA’s growth is tied to a 34 per cent reliance on the mining industry, making it the most volatile in the nation,
A new report by Bankwest Curtin Economics Centre suggests that focusing resources on emerging sectors could see stable, long term employment rates and economic growth exceed the state government’s goals. But not all the suggested areas for expansion fall into an agreed understanding of sustainable industries. The report nominates lithium, big data and tourism, but it also included defence.
Smart specialisation and diversification
The report acknowledges the many benefits of the mining boom, particularly economic, but says diversification would be critical in ensuring long term growth in the state and creating a more resilient economy.
Report co-author and BCEC director, Professor Alan Duncan, said it would be about building on the state’s natural strengths, particularly those components that have been periphery to mining and agriculture in the past.
“By identifying new sectors that harness the state’s natural strengths, a more diverse WA economy could add 163,000 new jobs in the next five years,” Professor Duncan said, “with more than 48,000 spread across WA’s regions.”
This exceeds the state government’s own target for 150,000 new jobs over the next five years, with regional jobs growth of 30,000, and would provide a $3.5 billion boost for the WA economy in Perth alone.
Professor Duncan explained such growth, however, would be contingent on “smart specialisation” policies that consider evidence-based development with objectivity and transparency.
“This approach is not about ‘picking winners’, “but about identifying priority industries based on the strength and assets of a region,” he said.
Using this smart specialisation policy approach, the BCEC report has identified opportunities for growth in emerging sectors and industries, including defence, lithium, rare earths, science research, big data, tourism, and air and space technologies.
Emerging sectors could create 48,000 new regional jobs
“Many of WA’s regions will have the potential – and, in some cases, the need – to expand both specialist and general medical services, childcare and education services and residential aged care to support growing populations both in Perth and regional WA.”
Fellow co-author, Dr Steven Bond-Smith, identified rail, boat and freight transport construction, scientific support, agriculture and food processing as other suitable industries for long term growth, particularly in the Peel region on the south coast.
“We were also able to identify that the Gascoyne, Mid-West and Kimberley regions could benefit from the growing defence industry,” Dr Bond-Smith said, “while many of WA’s regions are well-placed to expand scientific testing and analysis services industry, which is a key component of WA’s strengths in mining and agriculture.
In the Wheatbelt, for example, new industries such as agriculture and horticulture, downstream food processing, other types of mining, log sawmilling, accommodation and grain wholesaling were reportedly capable of generating an additional 3850 jobs and $1.2 billion for the WA economy.
The report names several industries could be expanded for job creation. Not all are considered sustainable. The report lists areas such as scientific testing and analysis services, oil and gas extraction, defence, offshore caged aquaculture, offshore longline and rack aquaculture, airport operations and air and space transport that could generate an additional 7250 jobs and $3.5 billion for the WA economy.
UPDATE: 4 September 2019. This article has been updated to clarify that several industries suggested for expansion are not generally considered sustainable industries, such as extractive oil and gas industries, air and space travel (with current fuels).