The annual survey of major resource and infrastructure projects featured in this week’s WA Business News provides plenty of support for those who have a ‘stronger for longer’ view on the state’s economic outlook.
The annual survey of major resource and infrastructure projects featured in this week’s WA Business News provides plenty of support for those who have a ‘stronger for longer’ view on the state’s economic outlook.
The numbers are almost mind-boggling.
Major projects currently under way involve total spending of nearly $50 billion.
This follows the completion of many big projects in the past three to four years, and there is an even bigger queue of projects keen to get started.
I use the word ‘queue’ deliberately, because it is hard to imagine all of the prospective projects, in areas as diverse as oil and gas, iron ore, nickel, gold, molybdenum, alumina and copper, getting under way in the immediate future.
And that’s not counting all of the infrastructure projects that will be needed to support the state’s growing economy.
Shortages of skilled labour and infrastructure bottlenecks have already had a big impact on business in Western Australia – and the challenge will not get any easier.
The state’s unemployment rate has dipped to just 3.1 per cent and the labour force participation rate has risen to record levels, so the reality is that there is a very limited pool of workers available in WA.
Similarly, the state’s infrastructure is being squeezed.
Perth’s domestic airport, the harbours, the rail freight system and some of the state’s major roads are all battling to cope with sustained rapid growth.
These problems are most apparent in fast-growing regional areas, with the north-west and Ravensthorpe providing extreme examples.
The situation in Karratha has become almost bizarre.
LandCorp has called tenders for the supply of accommodation so that builders who move to Karratha will have somewhere to live while they build accommodation for other workers planning to move there.
Similarly, towns like Port Hedland, Ravensthorpe and Hopetoun simply have no accommodation, and services that traditionally have been taken for granted are not available.
Skilled labour shortages and the infrastructure squeeze will not halt the state’s strong economic growth, but they will apply a handbrake.
Unless there is a large and quick increase in skilled migration – and that seems extremely unlikely given the political sensitivity surrounding migration – WA’s growth will be constrained.
While that will be frustrating for project proponents, it may have a silver lining.
Assuming China’s economic growth is sustained, it could mean that WA will have a steady flow of new projects coming on stream every year for possibly the next decade.
That will reinforce the shift away from the traditional boom-bust economic cycle that has dogged WA ever since the gold rush of the 1890s.
As the state’s economic base gets larger and more diversified across commodity sectors, that also augurs well for more consistent long-term growth.
