Western Australian workers would have the most to lose of any state from a major downturn in China and the least to gain from a major growth in services exports, according to new modelling from Deloitte, but an increased openness to investment opportunities might bring an upside in both scenarios.
National production would be dramatically higher if Australia can get the most out of an increasing demand for services from Asia, up around half a trillion dollars by 2030, the consultancy found.
That would make average weekly earnings for workers about 7 per cent higher than a business as usual baseline, with finance and insurance, mining and agriculture among the biggest winners.
The WA economy is held back because it's underweight on services, the report said, with employment growing about 0.5 per cent by 2030.
Tasmanian jobs would be up around 3 per cent.
In an alternate scenario, where China’s growth rate falls below 3 per cent and drags Australia into recession, national income would be about $140 billion lower in mid-2019, Deloitte found.
Western Australia would be hardest hit, with employment more than 6 per cent lower in the 2019 financial year, compared to around 2 per cent lower in New South Wales.
That’s because some of WA’s biggest industries, such as construction, ore mining and oil and gas would have contractions of output between 10 and 30 per cent.
By contrast, thanks to the impact of a recession on the exchange rate, manufacturers would grow.
Neither outcome was considered likely, the report said, although both were plausible, and the intention was to map out the impact of such economic shocks.
Deloitte office managing partner of WA Mike McNulty said that the upside scenario was a good one for the west although it could be better.
That would require a better investment climate in the state, he said, and more courage for countercyclical investments in sectors such as tourism and agriculture, both services.
Mr McNulty cited the example of Crown, which has invested more than $1 billion on the Burswood peninsula, as an operation that should be replicated.
There was a level of resistance to change, however, he said, and frequently a short term focus when commodity prices were up.
In higher education, more investment may not necessarily be required, rather, improved marketing and great livability in the city generally would improve demand.
