It might be so geographically isolated that some consider it a foreign country, but when it comes to propping up the national economy, Western Australia has every other Aussie state and territory trumped!
In a recent fiscal health check conducted by CommSec chief economist Craig James, as published in SmartCompany, WA takes top honours as the best performing economy in the country.
“Western Australia leads the way on economic growth, construction work, unemployment, retail trade, population growth and equipment investment,” James says in his report.
“The only real weakness is dwelling starts (fifth ranked) and housing finance (third ranked).”
How is economic growth measured?
Eight criteria are assessed against long-term averages in a bid to determine which economies are outperforming. They are;
- Economic growth;
- Retail spending;
- Equipment investment;
- Construction work done;
- Population growth;
- Housing finance and
- Dwelling commencements
Coming in second after the mining boom state were the ACT and Victoria, joined by improved Queensland and the Northern Territory, with both states enjoying the fruits of their own resources boom.
Tasmania came in at last place with New South Wales and South Australia wedged somewhere in between.
“The Federal Treasurer calls it a “patchwork” economy. And it is hard to argue with the description,” James says.
“Western Australia is in strong shape, coming out on top in six of the eight indicators. At the other end of the scale is Tasmania, finishing at the bottom of five of the eight indicators.”
One thing the report highlights is how heavily our current prosperity as a nation relies on the mining boom, with the robust resources sector driving WA’s economic growth, equipment investment, construction activity and population growth well ahead of the pack.
Not surprisingly, Queensland and the Northern Territory also ranked well in these measures.
Without the benefit of mining magnates madly drilling big holes in the ground to convert mud into money, Victoria and New South Wales are not faring quite so well, as both states remain held back by their sluggish housing markets.
Western Australia’s ongoing mining boom sees the prosperity gap widen as the state continues to lead the pack, from retail trade to private investment. Although the housing market is still WA’s Achilles heel, things can only get better with a series of large resources projects still in the pipework.
The ACT might be small in stature, but it’s outperforming some of its larger counterparts when it comes to dwelling starts, construction and population growth, where it places second only to WA.
Not to be outdone, the Northern Territory is enjoying prosperous new resource projects, including the $34 billion Inpex liquefied natural gas project. Ranking second behind Western Australia for economic growth and retail trade, the biggest issue for the NT is sluggish population growth.
Victoria remains a solid, middle of the road performer in retail spending, economic growth, top-end construction and population growth. But its current strength (dwelling starts) could prove to be its greatest weakness, with concerns around longer-term housing market predictions and a softer job market.
While a lackluster housing market and below-average population growth are holding the state back, post flood rebuilding has seen Queensland’s economy claw its way into fourth place on the CommSec list, with more help in the form of solid mining activity throughout the state.
Craig James’ summation of the performance of the SA economy is worth quoting: “South Australia has also lost ground, but largely because other economies are performing relatively better. South Australia didn’t excel on any of the indicators, but it didn’t fail either.”
Faring marginally better than Tasmania, New South Wales is enjoying a robust labour market and above-average population growth, but when it comes to the housing market, dwelling starts and finance continue to drag the state down.
Tasmania, according to James, is “arguably is the number one candidate of any regional income redistribution as the Federal Government seeks to share the benefits of the mining boom across the broader Australian economy.”
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