The Bankwest Curtin Economics Centre at Curtin University has released a report on the Western Australian economy, highlighting that while the state’s current prosperity lies in international trade and a thriving resources industry, its future depends on diversification.
Released on 21 July, the Trading Up: International Trade Futures and the Western Australian Economy report calls for increased export diversification, leveraging Australia’s and Western Australia’s strengths in production that meets the world’s growing ‘green’ or decarbonisation agendas.
Modelling in the report shows that international trade directly benefits Western Australian families through higher income, more jobs and lower prices.
Trade benefited Western Australian households to the tune of $17.9 billion in 2022, worth $16,200 for each household in the state, and reduced prices by 4.3 per cent compared to a counterfactual situation of no trade.
Report co-author and Bankwest Curtin Economics Centre Director, Professor Alan Duncan, said Western Australia’s economic resilience to the pandemic had been the envy of other states, with goods exports in 2021-22 accounting for 59 per cent of the state’s economy, as measured by Gross State Product (GSP), compared to national exports which contributed 23 per cent to the Australian economy.
“The relative scale of Western Australia’s export sector emphasises just how much the state benefits from – and depends on – its economic relationships with trading partners,” Prof Duncan said.
“The Western Australian economy benefits from natural endowments, product specialisation and market integration as well as economies of scale, and its resilience through the COVID pandemic owes much to border protections that allowed mine sites and ports to maintain production cycles.”
The report found the free trade agreements (FTAs) Australia has signed with countries including China, Japan and the US have led to huge financial gains for Australian exports. Overall, FTAs with China, Japan, South Korea and Thailand led to estimated gains of $472 billion for Australian exports since each trade agreement was enacted.
Despite this, the report also foreshadows a growing level of protectionism among a number of trading partners and preferential domestic economic support for key industry sectors.
“The rising level of protectionism poses risks to open economies like Australia, particularly export-oriented states such as Western Australia,” Prof Duncan said.
“This emphasises the importance of the government’s ongoing work to deepen relationships with key partners and secure free trade agreements that are to our mutual benefit.”
The report highlights the future opportunities for Australia – and especially for Western Australia – that stem from the global decarbonisation agenda and the transition to net zero carbon emissions.
The Western Australian economy ranks 12th in the world for complexity in renewable energy and decarbonisation technologies according to a new ‘green’ economic complexity index developed by the Bankwest Curtin Economics Centre.
The green economic complexity index indicates that Western Australia is well positioned in green products capability – products that are identified as instrumental in the transition to net zero carbon emissions.
Report co-author, Dr Daniel Kiely, from the Bankwest Curtin Economics Centre said the announcement by the State Government of $148 million under the Investment Attraction Fund was a good step in moving forward the state’s diversification agenda.
“The scope of the 40 projects announced under the Investment Attraction Fund – including tourism, renewables and regional development – show the State Government is putting the meat on the bones of their diversification strategy, which, as we’ve said in this report, is essential in moving beyond Western Australia’s heavy reliance on the resource sector for its continued economic success,” Dr Kiely said.
The report also found that trade tariffs and border restrictions had negatively impacted trade services in both Western Australia and nationally, however sectors such as international education, tourism, and some agricultural-related exports were emerging from the crises.
“Continued investment should be made in the Western Australia brand to support the tourism and international education sectors in key and emerging markets,” Dr Kiely said.
At the same time, housing supply issues must be addressed to support the accommodation needs of skilled workers, international students, hospitality workers and tourists across the state.
Prof Duncan said that Australia – and especially Western Australia – is in an enviable position to capitalise on these emerging opportunities as long as it gets on the front foot when it comes to industry diversification, housing, infrastructure and trade development strategies.
“We need to diversify our export products and export markets to meet global demands in renewable energy and decarbonisation technologies; we need to support innovation and develop distinctive, differentiated and high value-added goods and services; and we need to focus on future skills needs.
“If we get it right, Australia is in a tremendous position to benefit from the changing face of global trade.”
