Feature Article - FACTBase Special Report – Perth as a resilient economy

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This month we released our FACTBase Special Report – Perth as a resilient economy, which marks the halfway point in our Bigger & Better Beyond the Boom project. The report is a significant contribution to the project, providing an evidence base to outline how and why the Greater Perth economy has changed over time; how it has experienced and recovered from different shocks; and the level of resilience in particular industries. The below article provides an overview of Greater Perth’s economic history and of its resilient nature.

Perth’s demography has continuously evolved since World War II, with significant changes in the make-up of Australian born residents compared with those from overseas. Increasingly, Greater Perth became a multicultural society, assisted by government-led projects creating new jobs for migrants, including rural development, industrial expansion, housing and infrastructure.

In 1966, 23.3% of Greater Perth’s population were foreign born residents, who predominantly originated from the UK. Migration from European nations continued to increase, and shifted from Northern European origin to Mediterranean and by 1981, 28.5% of Perth’s population were foreign born.

Throughout this period, the total population of Greater Perth increased significantly, from 272,000 in 1947 to more than 750,000 by 1971. The structure of where the population was based was also heavily influenced by government policy, with the first metropolitan planning policy for Perth, the Stephenson Hepburn plan in 1955, shifting the region from an east-west to north-south orientation. Key infrastructure and investment decisions included economic hubs in industrial and retail industries, the north to south Kwinana Freeway, the Narrows Bridge and the development of cities at Melville, Canning and Cockburn.

Government-led decision making continued to influence the development of Greater Perth, including the promotion of particular industries to enhance the economy. Agricultural exports formed a significant part of Greater Perth’s early economy, which primarily consisted of exports in wool and wheat. Chamberlain Industries are an example of an industry who were attracted to Western Australia in the 1940s by the State Government, who were offered financial support, factory access and tariff protection. The establishment of an oil refinery at Cockburn Sound was the result of a State Agreement between the Government and BP Australia, resulting in the Kwinana Industrial Area, which still contributes significantly to the Greater Perth economy.

The 1960s saw an economic shift from agriculture and manufacturing into iron ore through the discovery of ore deposits, which was assisted by the lifting of the iron ore export embargo and increased demand from Japan. This resources focus continued into the 1970s, with coal, alumina and mineral sands being added onto the list of resource exports, with associated increased exploration expenditure from $2.6m in 1966 to $46.5m in 1970. This shift in focus saw a decline in manufacturing activities, as global competition increased and markets were deregulated.

Between the 1970s to the most recent 2000s resource boom, the Greater Perth economy has been heavily reliant on mining and resources, enhanced by the discovery of oil and gas reserves, bauxite, nickel and energy resources. During the most recent mining boom, Western Australia’s GSP grew to reach $265 billion in 2013-14, a total of 17% of the nation’s GDP. This boom period helped new industries to thrive and facilitated investment in arts and culture, leading to increased vibrancy in Perth through festivals such as FRINGE WORLD and the Perth International Arts Festival, now the Perth Festival. The boom also created opportunities for infrastructure investment with Elizabeth Quay, Yagan and Kings Square.

In 2015, Greater Perth’s economy was worth $150.4 billion and accounted for 9.3% of the Australian economy. There were a total of 1,049,847 people employed in 2017, with 1.9 million residents living in Greater Perth. Key industries based on gross value add included construction, healthcare and social assistance and professional, scientific and technical services. There were four significant locations of economic activity in Greater Perth: Perth City, Osborne Park Industrial, Subiaco-Shenton Park and Nedlands-Dalkeith-Crawley.

Clearly, Greater Perth has a long history of economic boom periods, despite facing considerable external pressures. The report argues that the Greater Perth economy is in fact resilient, characterised by long-term positive growth in GSP since 1991, outperforming Australia as a whole in 20 of the 26 years between 1991 to 2016. In measures of GSP per capita, growth in GSP per capita, unemployment and comparative volatility, the Western Australian economy outperforms Australia consistently over time.

Moving forward, there are a number of industries that have been identified as critical to Greater Perth’s future economic growth and resilience. Tourism, health, education and the creative industries are all emerging, not only as important employment industries in the future but also as industries which will propel future growth. Primary industries such as mining, construction and agriculture will remain critical to the Greater Perth economy, with technological advancement essential to position these industries for future growth. Industries experiencing a significant amount of disruption include healthcare and social assistance, retail trade and manufacturing.

This report challenges conventional wisdoms by demonstrating that in fact, the economy is very resilient, recovers from shocks quickly and is increasingly diverse. Read the full report


Other articles from Insight, December 2017 (view email newsletter):