Western Australia’s new boom options: Deloitte report
The resources boom has been good to WA – but what comes next?DOWNLOAD
8 October 2013: Five super-growth sectors worth an extra $250 billion to the national economy over the next 20 years hold the key to Australia’s future prosperity, according to a new report from Deloitte. The report, entitled Positioning for Prosperity? Catching the next wave, is the third edition of the firm’s Building the Lucky Country series.
A companion press release considers the national impacts. However, Deloitte has also extended the analysis to each State and Territory. Our work finds that Western Australia has been the biggest single beneficiary of the initial phase of emerging Asia’s development. This phase was characterised by a striking leap in demand for industrial inputs such as Australian iron ore.
WA cashed in on exactly that: we exported 200 million tonnes of iron ore a decade ago, but five years from now the developments already in the pipeline mean that figure could rise to be as high as 900 million tonnes.
Yet Asia’s boom is changing shape. Although that poses some challenges, it also generates new opportunities on offer as well. Most importantly, the rapid industrialisation of the past decade has taken a considerable toll on air quality in Asia’s cities. That has propelled Western Australian gas to the top of the global ‘most wanted’ list.
“Our gas is a clean and green alternative to coal that points to major development potential for this State in coming decades,” said Western Australian Managing Partner of Deloitte, Mike McNulty.
Moreover, global food demand is set to soar in coming decades, and that points to particular potential for Western Australian agribusiness. This State already supplies a third of the wheat that Australia grows and the future is bright considering that technological advances mean that the biggest productivity improvements in global farm output is set to come from the world’s driest areas. As such Western Australia’s relatively poor soil and low rainfall is where the potential for improvement is greatest.
This State also has particular potential in so called ‘green oil’ – growing algae using a combination of seawater and sunlight, two resources that this State has in spades.
However, while these and other super growth sectors such as higher education and wealth management point to new waves that Western Australia can surf in coming decades, this State has a particular interest in extending the current boom in demand for mineral resources.
Central to the Deloitte report is a Positioning for Prosperity map, which assesses where the next waves of prosperity are most likely to come from by plotting expected average global GDP growth rates over the next 20 years against the level of Australian competitive advantage for each sector. Below are two versions of the map, one for Australia as a whole and one for Western Australia; the latter serving as a timely reminder of just how important the mining sector will be for this state in coming decades.
Here too there will be great global growth ahead. As BHP Billiton’s Andrew Mackenzie recently noted, “Global demand for commodities is expected to grow by up to 75% over the next 15 years as 250 million more people move from the Chinese countryside to cities and Asia’s middle class approaches 3 billion.”
It is therefore vital that Western Australia seek to address the cost and regulatory roadblocks to future mineral development in this State. That won’t be an easy task – or a short one. But it is clearly a vital one for Western Australians.
NB: See our media releases and research at www.deloitte.com.au
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