05/11/2008 - 22:00

Making WA a smart economy

05/11/2008 - 22:00

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ONE of the recurring criticisms of Western Australia is that the state is little more than a quarry for the rest of the world and that our small, one-dimensional economy drives bright, young talent to cities like Melbourne, London and Sydney.

Making WA a smart economy

ONE of the recurring criticisms of Western Australia is that the state is little more than a quarry for the rest of the world and that our small, one-dimensional economy drives bright, young talent to cities like Melbourne, London and Sydney.

The debate around this topic has been advanced by a thought-provoking study by independent cultural organisation FORM in partnership with accounting firm PricewaterhouseCoopers and the Australian Bureau of Statistics.

The Comparative Capitals study points to some worrying trends for WA. Its public release coincides with two other events that provide a more positive picture for WA.

Comparative Capitals analyses demographic and education trends in Perth and other state capitals around Australia and throws up a raft of policy challenges for WA.

It finds that the number of Western Australians achieving a bachelor degree or higher is falling below the national average.

It also highlighted the large number of young Western Australians who leave the state each year, in search of international experience, better employment opportunities and higher incomes.

This is partly offset by people either returning or migrating to WA, but the report finds a big difference between the people leaving and those arriving.

"Perth's skill base and its appeal to a broad spectrum of professions, is currently imbalanced," the report concludes.

"It continues to lose intellectual property in the form of professional, creative and scientific occupations to destinations over east and overseas."

In contrast, the inflow, from both interstate and overseas is concentrated in the construction and mining industries and most of these people do not hold a tertiary qualification; many do not have any qualification.

Where migrants to WA do hold a tertiary qualification, there is a strong bias towards engineers and, to a lesser extent, scientists.

"While no one is denying the talent embodied by this group, we should be aware of the potential drawbacks that could result from accumulating a narrow skill set," the report states.

Many people believe that WA needs a stronger commitment to research and development and innovation, to foster the emergence of a smarter, more diversified economic base.

Those people now have something to cheer about.

The Bureau of Statistics has found that business in WA spends proportionately more on research and development than business in any other state.

Business R&D spending in WA was $1.9 billion in 2006-07. This was equivalent to 1.37 per cent of gross state product, higher than any other state. It was also equivalent to 16.1 per cent of the national total, which indicates that WA is punching above its per capita weight.

The WA spending was heavily concentrated in the mining sector, which accounted for 60 per cent of the total. Critics would no doubt suggest this sectoral concentration exacerbates the imbalance in the state economy.

There is an alternative interpretation. R&D spending makes the mining industry more competitive and efficient and therefore more resilient to global downturns.

The broad sectoral definition may also mask the fact that the mining services sector attracts a lot of R&D spending.

The state government's annual industry and export awards, announced last week, showcased some of the truly innovative success stories in mining services sector, which exports skills and expertise to a global market.

Privately owned Osborne Park company Immersive Technologies, which won the premier's award for excellence, is a prime example of the type of business WA should champion.

It has become a world leader in the development of training simulators for heavy equipment operators in the mining industry and has exported its products and services to customers in 20 countries.

Another home grown success story and industry and export award winner is Nedlands-based mining software company Micromine.

Along with competitors like Gemcom Software, Datamine and Maptek, the growth of Micromine's business has strengthened Perth's status as one of the world's major centres for writing mining and exploration software.

Companies like Immersive and Micromine have built on WA's base as a global mining province to develop skills and services that can be exported in their own right, irrespective of what is happening in mining.

A similar trend is emerging in the oil & gas sector, which has supported the growth of award-winning companies like Neptune Marine Services and Divex Asia Pacific.

Neptune has grown from a small Perth base three years ago to become an international supplier of engineering services to the oil & gas and marine sectors.

Aberdeen-based Divex is one of many international suppliers to the oil & gas industry that has decided in recent years to establish a Perth-based division as a base for servicing the Asia Pacific market.

These award-winning companies provide great opportunities for Western Australia and serve to enhance the contribution that the mining and resources sector, in the broadest sense, can make to the state.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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