LETTER FROM PERTH CITY OF LIGHT,
CITY OF HOPE
Western Australia has become the economic engine room of Australia, with its wealth of natural resources, and has largely escaped the global financial crisis. Brian Martin (BA 93, MA 94, HDipBS 95, MBS 00) reports from Perth
P
ERTH is the capital of Western Australia (WA), the largest state in Australia, with an area of 2,645,615 sq km. It is roughly the size of western Europe, but with a population of 2.1 million people, 1.3 million of whom live in Perth. The city is closer to Singapore than Sydney and is the most isolated capital in the world. In 1962 John Glenn, the first US astronaut to orbit the earth, named Perth the ‘City of Light’ when
he saw it lit up in the darkness as its residents turned on their lights throughout the night especially for him. In more recent years WA has become an economic engine room for Australia, thanks to its natural resources, in particular iron ore, oil and gas as well as gold, aluminium and a range of other minerals and metals. WA is often referred to as the ‘boom or bust’ state due to its reliance on the cyclical nature of resources. But in the past decade, it has been perfectly located to feed the resource-hungry markets of China, India, Japan and South Korea. I moved here over six years ago with my wife, who is originally from WA. I work as relationship manager with the Institute of Chartered Accountants in Australia, looking after WA and the Northern Territory. I’m very lucky that my work gives me contact with many of the major companies and firms here. The Terrace, as the business dis- trict of St Georges Terrace is known, is the epicentre of the resources industry, with companies such as Rio Tinto, BHP Billiton, Fortescue Metals, Barrick Gold, Newmont Gold, Woodside and Chevron oper- ating national or international head offices here. Oil and gas have become nearly as important as iron ore in recent years. Chevron, for example, signed off an AUD$80bn investment last year to develop oil and gas fields off the north-west coast of WA. This investment has been the most high-profile project, but at the same time other resources projects are pumping another AUD$86bn into the state. While WA represents just 10% of Australia’s population, it is respon- sible for 41pc of its merchandise exports and 13.6% of national GDP. WA is the largest exporter in the country and over the past five years its gross state product has grown by 23.9%. Australia, as a whole,
36 UCD BUSINESS CONNECTIONS
avoided recession during the GFC (global financial crisis). It was more of a speed bump in Perth, with a short economic decline, but resources investment and federal government stimulus packages have brought the local economy back to strong growth levels. One local described the recession in the city as “all doom and gloom for a few weeks, then we had a few more glasses of champagne and forgot all about the GFC”.
On top of this economic good news, Perth is one of the sunniest cities in Australia, with an average of 300 days of sunshine a year. It was also ranked eighth in The Economist’s ‘Global Liveability Survey 2010’. Lonely Planet recently rated the Margaret River wine region, 300km south of Perth, as one of its top 10 worldwide destinations – the only location in Australia to make the list. All in all it’s not a bad place for a boy from south Dublin to end up! On the flip side, this prosperity has also brought about what the media calls the ‘two-speed economy’, where highly-paid mining jobs attract both locals and those from further afield. This boom has raised property prices and the cost of living. Perth property prices have increased at an astounding rate; in the past year alone they have risen by 15pc.
Another phenomenon is the ‘fly-in, fly-out’ worker, where miners
fly to sites over two hours away to the north-west of the state, work for a week or two and then return home to Perth for a week or two off. Perth Airport is awash with yellow and red overall-clad mine workers setting off or returning from their shifts. Meanwhile, many of those not working in resources struggle to
keep up with increases in the cost of living, while employers battle to compete with the lure of high salaries offered by the mining indus- try. When buying a cup of coffee or a good meal in Perth, chances are you’ll be paying a fair bit more than you would in Sydney. Even national politics are not immune to the influence of the resources industry, as was shown in recent lobbying that resulted in a dramatic leadership change and subsequent general election. In the April budget, the now former Australian prime minister, Kevin Rudd announced his Labour government was going to impose a resource super profits tax of over 40% on the profits of many resources companies.
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