Economic Direction and Diversity

It was great to see WA being recognised as the leading state by topping the Commonwealth Bank State of the States report, which also highlights that there are more like 3 speeds to the Australian economy

The main change in the state rankings over the past three months has been the significant out-performance of the Western Australian economy and the separation of other economies into two groups. The ACT leads the second group from Victoria and South Australia. But there is little to separate Tasmania, NSW, Northern Territory and Queensland. The term ‘multi-speed’ is therefore very appropriate when considering economic performance.

It has to be said that there is never really a single speed economy (with the resources sector quite often being the second, faster (or slower) speed); however it is interesting that there is such a gap between WA and the rest of the country… we are certainly keeping the place afloat.

Mining Surges…

Aligned with the State of the States report – is the news that Mining investment is surging – this comes from the BIS Shrapnel report showing that mining production will increase by 45% in the next 5 years… and that means more jobs (and more royalties – I can see the current focus Brendon Grylls has in this space).

Unfortunately I did not have the spare $13,500 to look at the actual report – so I can only report and comment on news articles and the overview.  The prognosis is for continued investment in the resources sector for a lengthy period – i.e. past the next term of the state government therefore the question is what investment in our future can be made while we are riding on the coat tails of the resources sector?

Critical Nature of Technology for the Resources Sector

Well to answer the above I managed to get a guided tour of Rio Tinto’s Remote Operations Centre near Perth Airport…

Source: SMH

This place is an ICT nerd’s heaven – more screens (including Jumbo ones), computers, cabling, and communication gear than you can point a laser pointer at!  The Centre is part of Rio Tinto’s Mine of the Future – an initiative to use the latest in technologies to aid in the automation of some of the processes of mining as well as improving efficiencies.

This is the showcase of where ICT and Knowledge Work is intimately linked to the ability for the resources sector to successfully operate and therefore provide revenue to the state (i.e. through those nice royalties).  Imagine the sector without ICT and you soon realise that it would not be operating here in WA (or only is a hugely limited capacity).

How to apply this to the broader WA Economy?

I’ve said this before and I’ll say it again – however while we’re reaping the benefits of the resources sector we need to do several things – including:

  1. Invest in our future by building the infrastructure to support our fast growing state.
  2. Leverage off the Resources sector’s ICT requirements and skills to develop a broader Knowledge Economy (i.e. Education / Training / Businesses etc.).

This is where we need to focus our attention to get some lasting benefit for the state.  Now it is time to start planning to make it a reality… more on this soon 🙂

Tom.

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4 Responses to Economic Direction and Diversity

  1. Bill Gardner says:

    Does any planning by the State regarding the extraction industries include efforts to encourage local ‘highgrading’ of ore and any other means of making a buck here other than royalty and a bit of tax (relative to profits made)?

    WEG

  2. Tom Gardner says:

    That is a good question – however you have to look at the differential labour costs, safety controls, regulation of business etc. that we have here in Australia (and of course WA) as compared to China. That said Japan does have as far as I know a viable steel business and they have similar restrictions to us. I believe that the initial intention was to do that in the north-west back in the 60’s and 70’s… we’ve seen several attempts to do so in more recent time such as BHP’s HBI plant in Port Hedland ended up costing some $2.6 billion and ended up being decommissioned so I’d say there would be limited desire to invest in similar and potentially risky projects in the future. We could see the development of a chemicals industry up in the North West associated with the expansion of the LNG trains and projects… but time will tell. I’d love to see some additional value adding onshore if possible.

  3. Pingback: Minds of the Future | My Future State

  4. Pingback: A Bright Future for Perth? Yes Please! | My Future State

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