24/07/2008 - 16:31

Gas crisis wipes $1.8bn off WA's economy

24/07/2008 - 16:31

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Western Australia's economic value will be reduced by $1.8 billion over the next five years as the Department of Treasury and Finance provide estimates of the economic disruption brought about by the gas crisis.

Gas crisis wipes $1.8bn off WA's economy

Western Australia's economic value will be reduced by $1.8 billion over the next five years as the Department of Treasury and Finance provide estimates of the economic disruption brought about by the gas crisis.

Modelling undertaken by the department estimated that WA's economic growth will be trimmed by 0.5 percentage points to 7 per cent in fiscal 2008 but will be back on track in the 2009 financial year, forecast at 6.25 per cent.

Treasurer Eric Ripper was quick to reassure that the impact of the gas disruption, forced by a pipeline rupture at the Varanus Island gas facility, to the state's economic growth would be temporary.

"Despite this initial reduction in growth, WA's economy is still expected to be the fastest growing state in 2007 08 and 2008 09, and remains on track to record its third consecutive year of growth above six per cent," Mr Ripper said.

"For 2007-08, employment growth is reduced by 0.7 percentage points, and export growth by 1.3 percentage points, while the investment growth rate remains the same."

Mr Ripper said the modelling showed that although the growth rates for most industries had slowed, it still indicated an upward trend for these industries in 2007-08.

The most affected exports were energy intensive sectors such as chemicals, metal products, textiles, clothing, footwear and rubber and plastic products.

Gas-fired electricity stood out as the single most affected industry in terms of output and there were also flow-on effects to the non-resource economy.

"In the long term, the disruption is estimated to reduce WA's economic value by $1.8billion between 2007 08 and 2011-12," the Treasurer said.

"But this $1.8billion figure (estimated at 2008-09 values), only equates to 0.2 per cent of the economy over the same five-year period.

"While there is no doubt that the incident at Varanus has caused significant disruptions to particular firms, the overall health of the economy is expected to come through this disruption well," he said.








 

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