Economy of Western Australia
The Western Australian economy is a state economy dominated by its resources and services sector and largely driven by the export of iron-ore, gold, liquefied natural gas and agricultural commodities such as wheat. Covering an area of 2.5 million km2, the state is Australia's largest, accounting for almost one-third of the continent. Western Australia is the nation's fourth most populous state, with 2.6 million inhabitants.
In 2011, Western Australia provided 46% of Australia's merchandising exports. In 2018-19, Western Australia's gross state product was A$260.6 billion, making it the nation's most productive state, and one of the most wealthy places on earth with a GDP per capita of A$135,479. In 2018-19, Western Australia exported A$147.1 billion worth of goods and imported A$34.1 billion, creating a trade surplus of A$112.95 billion. This is in contrast to the national trade deficit of A$70.5 billion.
Structure
Overview
Western Australia's economy is largely driven by extraction and processing of a diverse range of mineral and petroleum commodities. The structure of the economy is closely linked to the abundance of natural resources found in the State, providing a comparative advantage in resource extraction and processing. As a consequence:- The Western Australian economy is more capital-intensive than all the other states.
- Gross state product per person is higher than any other state and well above the national average.
- Diversification over the past 15 years has provided a more balanced production base and less reliance on just a few major export markets, insulating the economy from fluctuations in world prices
- There has been strong growth in the services and construction sector, which have increased their share of economic output.
- Recent growth in global demand for minerals and petroleum, especially in China and Japan, has ensured economic growth above the national average.
Resources
In global terms, Western Australia is a significant producer of a wide range of resource commodities. Australia is the world's largest producer of both bauxite and alumina, with half of national production coming from Western Australia. Alcoa's Huntly mine provides the feedstock for its three refineries at Wagerup, Pinjarra and Kwinana. Worsley Alumina transports bauxite from its Boddington mine to its refinery at Worsley via a 51 km conveyor belt. It is the world's third-largest iron-ore producer and extracts 75% of Australia's 240 tonnes of gold. Diamonds were extracted at Argyle diamond mine in far north of the Kimberley region before it ceased operations in 2020. Coal mined at Collie is the main fuel for baseload electricity generation in the state's south-west. Australia is the world's fifth largest exporter of LNG, most of which is produced by the North West Shelf Venture near Karratha.Resource sector growth in recent years has resulted in significant labour and skills shortages, leading to recent efforts by the state government to encourage interstate and overseas immigration. According to the Feb 2012 statistical data, the average full-time adult weekly income was A$1,617.90 in Western Australia. Recent growth has also contributed to significant rises in average property values in 2006, although values plateaued in 2007. Perth property prices are still the second highest in Australia behind Sydney, and high rental prices continue to be a problem. A lot of this has to do with the mining industry being so strong in WA.
Agriculture
Agricultural production in WA is a major contributor to the state and national economy. Although tending to be highly seasonal, 2006-07 wheat production in WA was nearly 10 million tonnes, accounting for almost half the nation's total. and providing $1.7 billion in export income. Other significant farm output includes barley, peas, wool, lamb and beef. There is a high level of overseas demand for imports of live animals from WA, driven mainly by South East Asia's feedlots and Middle Eastern countries, where cultural and religious traditions and a lack of storage and refrigeration facilities favour live animals over imports of processed meat. Approximately 50% of Australia's live cattle exports come from Western Australia. The state maintains the list of, and imposes particular handling requirements for, declared weeds here. Despite also being a crop, this includes Opuntia ficus-indica.Wine
Western Australia has major wine producing regions in the South West located in Margaret River, the Great Southern and the Swan Valley. Several wineries produce wine for local consumption and international export.Fishing
Western Australia has a significant fishing industry. Products for local consumption and export include Western Rock Lobsters, prawns, crabs, shark and tuna. Processing is conducted along the west coast. Whaling ceased at Albany in 1978.Manufacturing
South of Perth is the heavy industrial area of Kwinana. Located here is the nation's largest oil refinery which produces petrol and diesel for local consumption, an iron plant, alumina and nickel processing, port facilities for grain exports, and support industries for mining and petroleum such as heavy and light engineering, and metal fabrication. Shipbuilding and associated support industries are found at nearby Henderson, just south of Fremantle. Significant secondary industries include cement and building product manufacturing, flour milling, food processing, animal feed production, fertilizer production, automotive body building, brewing and printing.Tourism
In recent years, tourism has grown in importance, with significant numbers of visitors to the state coming from the UK, other European countries Singapore, Japan and Malaysia. Tourists from China increased 50% between 2011 and 2012, from 22,000 to 33,000. Revenue from tourism is a strong economic driver in many of the smaller population centres outside of Perth, especially in coastal locations.Total international visitors to WA is currently increasing above the national average - for the year ending June 2011 there were 735,900 international visitors, a growth of 5.3% for WA compared to a growth of 3.4% nationally. They spent in total A$1.94 billion, up 9.4% from the previous year. against a national average growth rate of 4.3%. In addition, nights stayed by international visitors was up 5.6%, with a 22% increase in international business visitors. The largest spike in international visitors came from Indonesia, USA, New Zealand and Malaysia. The biggest decreases in visitor numbers to Western Australia by country was Korea, South Africa, Netherlands and Canada..
Overall Western Australia had an estimated 7,000,000 overnight visitors to the State for the year ending December 2012, with 5,160,000 coming from intrastate, 1,112,000 from interstate, and 760,800 from overseas, making Western Australia's tourism industry worth approximately A$6 billion in total.
Economic history
Foundation (1829 to 1850)
The British Government founded the Swan River Colony in 1829 with the intention of establishing the colony with an agricultural and pastoral base. The poor quality land—particularly in the region in close proximity of the coast—and an inadequate labour supply and infrastructure hindered the expansion of the economy.Convictism and the gold boom (1850 to 1913)
The Swan River colony was not intended to be a penal colony but, in 1848, the introduction of convicts from Britain was sought to provide much needed labour and income from the British government. These were to be males, so an immigration program was also funded to redress gender imbalance. Prior to this, population and the economy had stagnated. By 1870 the European population had tripled and was reaching 20 000, around half of these were convicts. This allowed the establishment of smaller industries and reduced the reliance on imports. The new labour pool was utilised in new Public Works. The colony began attaining a greater level of financial independence.The discovery of gold in this period also increased the population. Migration from the eastern states, where a post gold rush economic slump existed, and from overseas increased sharply. While much of the revenue generated was retained by the British crown, some was directed toward creating infrastructure in the state. New towns, Coolgardie and Kalgoorlie, were established at the goldfields and the remote northern town of Roebourne and its port Cossack were boosted by the associated economic boom. The city of Perth and the port of Fremantle, Western Australia were also invigorated by the new economy.
World Wars and Depression (1913 to 1946)
The First World War had a disruptive impact on economic development. Wartime conditions ensured high prices for agricultural products, but also created inflationary pressures and manpower shortages, while the completion of the transcontinental rail link in 1917 highlighted growing integration into the national economy and a decline in dependence on Britain.In 1919 the state government sought to resume economic growth through the introduction of soldier-settlement in the south-west region. However, initial enthusiasm waned in the face of concerns about the feasibility of the proposed program, while Labour unrest raised concerns about the ability of the state government to manage this program. Undeterred the Nationalist government of James Mitchell pressed ahead. Indeed, Mitchell's enthusiasm was such that his critics soon dubbed him "Moo-Cow" Mitchell. Unfortunately soldier-settlement soon ran into problems, cost the state over £5 million, and led to the defeat of the Mitchell government at the polls in 1924.
Given the economic importance of agriculture and the debts incurred in the 1920s it was not surprising that the Great Depression had a major impact on WA. Falling prices for agricultural goods hit farming areas hard leading to a further fall in demand, rising unemployment and much hardship. It was only after the Labor government of Philip Collier accepted the Premier's Plan and agricultural prices began to rise that the economy recovered. Even so, unemployment in WA did not fall below 10% until the outbreak of war in 1939.
World War II had a much more dramatic impact on the economy than the previous war. It immediately stimulated industry and agriculture effectively ending the Depression. After the introduction of manpower controls and conscription a severe manpower shortage developed that would continue into the 1950s. During the war the Labor governments of John Willcock and Frank Wise actively promoted industrial growth in the industrial areas of Midland and Welshpool, and was effective in mobilising the population to support the war effort. In addition port facilities in Fremantle and the air transport facilities in Perth were expanded to cope with wartime needs. To balance these developments the attacks of the Imperial Japanese Forces on the north of Western Australia caused much of the existing economic infrastructure of towns like Wyndham, Derby and Port Hedland to be destroyed.