A report prepared by the Chamber of Minerals and Energy of Western Australia and professional services firm KPMG indicated that a 10% increase in resources export demand would increase the Australian standard of living by $A2 billion in 1-3 years.
For WA, this benefit would translate to $720 million in the short run.
In a three to 10-year timeframe, the export boon would improve the national standard of living by $3.8 billion and the WA standard by $2.7 billion.
The study served to illustrate that although additional investment would be required from foreign entities to meet increases in Australian commodities demand, Australians would benefit from a flow-on effect.
“While the returns on this investment will go to foreigners, the enterprises they support employ and pay wages to domestic residents and pay taxes to the Australian state and federal governments,” the report said.
“As a result, income to Australians is also higher.”
Industries such as construction, wholesale and retail trade, accommodation, food services, financial and business services were all found to benefit from an increase in resource export demand – with these industries experiencing higher industry annual value added in the long run of $7.1 billion at the national level and $3.9 billion in WA.
The prominence of the largest state was further emphasised by the finding that WA’s resources sector represented 53% of the country’s total resource sector contribution to the gross domestic product of $169 billion.
When including resources-related manufacturing and resources-related construction jobs, the state’s resource sector employment figure totals some 143,000 direct employees, as of 2011-12.
It represents 11% of WA’s total employment and rends the resources sector as the state’s largest employer.
The WA resources sector alone accounted for 41%, or $89 billion, of the gross state product in 2011-12, making it the single largest contributing sector to the economy.
The report forecast a 4.4% growth in WA’s GSP in 2014-15, ahead of the forecast GDP growth rate of 3.1% but said much of that growth was expected to be generated by declining resource sector investment.
However, despite slowing of investment, the value of WA committed projects at the end of April 2013 stood at $141.7 billion with 28 committed projects.
Although there were six major projects completed in the six months to April 2013, the total value of committed projects remains steady and has increased slightly, due mainly to significant cost increases for several major projects.
LNG and gas projects account for $105 billion (74% of the total value), while iron ore projects account for $28.4 billion (20%).
As more projects come online and the operational phase expansion takes over, CME expects capital investment will slow but the sector will continue to contribute significantly to the broader economy.
“The resources sector has been a driver of significant income, employment, community and infrastructure development and this report endeavours to quantify some of the broader benefits derived from the sector,” CME chief executive Reg Howard-Smith said.
“It is clear that the benefits of a strong and expanding resources sector are shared widely and not just enjoyed by those participating directly in the sector.
“Outlining the economic reach of the Western Australian resources sector highlights the importance of a sustainable, strong and growing industry which, with the right policy settings, can continue to deliver benefits for all Australians.”
