Resources save the day again

WAS that a bugle sounding off in the distance?

One thing you have to love about living in WA is everyone time the nasty menace of recession surrounds the pilgrims of economic growth the resources cavalry arrives with a sense of timing few Hollywood directors could contrive.

This time, just as the evidence was starting to mount that the first official year of the new millennium was shaping up to be a bad one, it was the $2.4 billion expansion of the NW Shelf gas project which appeared like the troopers on the horizon.

That is the way of the wild West.

The economists will tell you that WA relies more heavily on business investment than the other states, a fact that counts against during national boom times when retail spending goes through the roof.

Of course, businesses also work on confidence in the market when they invest, just as consumers do when they spend.

It’s just that the cycle is different.

Business is the driver. When business is confident investment will pay dividends it starts to spend, beginning the cycle of trickle down which eventually ends up with consumers taking their bulging pay packets, blowing them at the casino, or buying the latest fashions.

Because these cycles are different, WA’s economy acts slightly differently than the east coast, with shallower troughs in the bad times but weaker peaks in the good times.

These cycles start at the very top of the feeding chain. The biggest players, who have the biggest effect on the economy, need the longest lead time to make their investment decisions.

Putting on a fourth LNG train at the Burrup Peninsula is not like buying another delivery van.

Hence, we have a situation where a timely investment project appears to have saved the day.

A lot of WA business people will be priming up their businesses to meet growing demand from the North West Shelf, just as a series of other businesses are failing.

The two things square off to an extent, helping smooth the economic picture.

It’s a great thing about this State but, be warned, economic stability of this nature can also breed complacency. One day, there might not be a major resources project charging to our rescue.

Red tape ties up business migrants

Perhaps its time the Federal Government found a new way to sort the wheat from the chaff.

While tough immigration laws may be saving us from a wave of cheap labour and petty criminals, they also appear to be making it difficult for some people to come here and do business.

As our Aussie dollar hurtles to oblivion, we may soon find there are not too many people who are that keen to devote time and money investing in our Pacific Peso.

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