The future of WA’s economy: Life beyond mining – WAtoday

What do Dubai, Houston and Edmonton all have in common?

These cities in the United Arab Emirates, the United States and Canada all once faced the same problem Perth has right now - shifting their economiesaway from relying so heavily on resources.

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WA Premier Colin Barnett takes an evening stroll with WAtoday Political Journalist Brendan Foster and discusses the issues heading into the State Election.

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WA Premier Colin Barnett takes an evening stroll with WAtoday Political Journalist Brendan Foster and discusses the issues heading into the State Election.

In their case it was oil and gas: Dubai invested in airlines, tourism and luxury retail, Houston focussed on medicine, education and aeronauticswhile Edmonton homed in on technology, becoming one of the largest producers of video games on the planet.

Resources arevital to these cities' economies. But through diversifying their plays in otherindustries these placesare now better insulated from the boom and bust cycle that continues to define WA's economy.

Crime, roads, health, transport, infrastructure;there's a huge list ofworthy issues both side of politics are focusing on as they scramble to winvotes ahead of the looming state election.

But the economy is the fundamentalissue for WA - and whoeverwins the day on March 11will inherit acomplex economic riddle and be tasked - even foreverdefined - with how theyaddress it.

Can WA move beyondbeing a mining state?Photo: Brendon Thorne

This week WAtoday will explore fivesectors of the WA economy that could grow and be our future if they are given the right backing- tourism, the arts, technology, education and agriculture.

These are already important economic sectors, but they are not WA's focus. Mining is.

So to find out how WA canpivot from boom and bust to something a bit steadier, we'll be speaking with leaders of WA's otherindustries to find out what they want and what they needto prosper whether the Liberals or Labor are at the helm.

But first, let's take a look at where WA's economy is at right now...

The state of play for WA in 2017

"It was like being on a fantastic fairground ride, centrifugal forces throwing us wider and wider. Now imagine the machine breaks. For a while, it's even better, because you're really flying; but then, you're f----d, because nobody beats gravity."

These lines from the movie 24 Hour Party People describe the rise and fall of the 1990s 'Madchester'music scene - but theymay as well be describing WA's economy right now.

We all know that WA has been supercharged by the resources boom, and we all know that the good times are coming to an end. The signs are all around us, from the industrial zones of Wangarato the glass towers of St George's Terrace.

The mining sector has shed thousands ofjobs and justentered its second consecutive period of contraction. Perth'sCBD has gone from hosting the head offices of 45iron ore mining companies in 2012 to just 18 in 2017, andvacancy rates are at25.2 per cent- a 25-year peak.

WA's unemployment rate is the worst in the nation at 6.5 per cent, and the resource royalties hitting the state's coffers totalled $4.6 billion in 201516, a decline of 21 per cent on 201415 brought about by falling commodity prices.

Perth's CBD is changing fast. Photo: Philip Gostelow

Bankwest Curtin Economics Centre's 2016 report called this 'the new normal,' where under-employment is rising and growth is stagnating.

But Damian Stone from the independentfirm Y Research sees opportunity in this decline.He quite literally has his finger on the pulse of Perth - his firm goes door to door to find out which businesses aredoing what where, and produces detailed reports on business trends in WA.

From what he's seeing first hand, Mr Stone reckons the crunch is coming sooner than we'd like to think.

"2017 marks the end of the construction boom, including Gorgon, the largest resources project ever in Australia," he said.

"This process will accelerate in 2017 as WA moves on from the "resources boom" and starts to transition to a more diverse, resilient economy based around the evolution of the resources sector and WA's emerging economic drivers.

"Inaction will lead to economic stagnation as we await the next round of investment in resources projects. If we wait until the next investment boom commences it will be too late to adjust. 2017 is the time to move forward."

Looking to the future of WA's economy

There's widespread consensus that diversifying the economy throughsectors like tourism and agriculture is the way ahead, but the Bankwest Curtin Economics Centre'sresearch showsthese sectors barely make a dent right now.

Agriculture contributed less than two per cent to the state's output in 2015; tourism-related industries 4.9 per cent.

Mining, by comparison, made up 37 per cent and remainedthe sixth-biggest employer.

So it's a conundrum - mining is still the cornerstone of WA's economy, but it's shedding jobs, slowing down and offers no guarantee of long term stability.

Y Research's Damian Stone reckons WA needs to take a deep breath and ask this question -what do we want to be?

"Mining will always be there. But beyond that, are we a tourismhub? The new food bowl of Asia? The boarding school of the region? The new Silicon Valley of technology start ups?

"Once we determine our place in the world, the government and private sector need to work together. What can we learn from international resources cities, is that government assistance and leadership is required from the federal to the local level with a co-ordination of effort.

"Support can range from innovation funds, payroll tax exemptions, cutting red tape, international marketing, investment tours etc. As countries around the world look to close their borders, we need to be open to the world."

WA has much more to offer than just iron ore and gold.

The resources boom may be fading, but according to Mr Stone, it's left us things can be capitalised on if we move quickly.

"The resources boom has left a significant legacy for our state beyond Elizabeth Quay, Fiona Stanley Hospital, the new, redeveloped Perth Airport and the Burswood Football Stadium.

"The real legacy of this current boom is a larger population with significantly higher incomes compared to 2004. Combined with record growth in property development in metropolitan and regional areas, Perth will be better prepared for the next boom than it was for the last."

Time and tide wait for no one

President Barack Obama's first White House chief of staff Rahm Emanual famously said, "You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before."

Just as the mining boom was an unprecedented economic opportunity for WA to grow, so too is the slow down.

So let's start the conversation.

On Tuesday WAtoday willlook at WA's tourism sectorand see how sharing our state's wonders could pay the bills, now and far into the future.

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The future of WA's economy: Life beyond mining - WAtoday