Western Australian Economic Growth

Senator Alan Eggleston has some interesting comments on the Western Australian boom with its economic and foreign policy implications. The Westralians have enjoyed the pressure that a booming China and India have put on commodity prices. Eggleston opens with an anecdote on the benefits to Western Australia of such growth;

A few weeks ago I was speaking to the CEO of a major corporation in Sydney, who said that he thought the leading cities in Australia now were not Sydney and Melbourne but Sydney and Perth. That is surely indicative of how things have changed in Western Australia. But, in the midst of all this economic boom in Western Australia, we have to question how sustainable the boom is. According to the Minerals Council of Australia, in 30 years time the largest economies in the world will be China, closely followed by India, with the United States coming in third.

Ouch for Melbourne but who does Eggleston see as sustaining our commodities and services exports after China and India exhaust their growth? It is Indonesia.

After discussing the enormity of Chinese and Indian growth, and its benefits and importance to Western Australia, Eggleston continues;

The third country to our north which offers Western Australia great opportunities is Indonesia, as I have pointed out several times here previously. Because of the close geographic proximity, the future of Indonesia and Australia is inevitably one in which both countries will have a lot more to do with each other. The north-west coast of Western Australia is very close indeed to the islands of Indonesia. While most of the Indonesian population lives at subsistence level, 30 million people¢â¬âwhich is, after all, 1 ½ times the population of Australia¢â¬âhave a high level of disposable income, presenting obvious opportunities to West Australian exporters and businesses. Indonesia is already an important destination for West Australian agricultural exports, which largely consist of live cattle and wheat but also include dairy products, seafood, fruit, vegetables and fresh juices, all of which come largely from the south-west.

Australia supported Indonesian independence after World War II when Indonesian nationalists fought against the Dutch. Unfortunately the militant nationalism led to the likes of Sukarno and Suharto holding power in TNI backed dictatorships. If Indonesia had managed to transition from a Dutch possession to an economically liberal democracy in 1945 we may look to our north in 2006 and see an economic powerhouse rather than one looking to get back on its feet and fully integrate into the world economy.

Based on population, and Indonesia having nearly twice the population of Japan, while not much fewer than the United States, there is massive room for Indonesia to increase the size of its economy to something similar to the size of the economic giants like the US, Japan, China and India. That is a large opportunity that will bring more than economic benefits. An Indonesian nation that is fully integrated economically and diplomatically will leave Australia in a benign region rather than the fifty years of on and off Konfrantasi we have had up to this point.

Eggleston warns that a growing neighbour brings competitive pressures as well as opportunities;

Indonesia is the world’s largest exporter of liquid natural gas, making Indonesia and WA competitors in the export of LNG to the Asian region. In fact, both Indonesia and WA were competing to supply LNG to China’s Guangdong project. While the North West Shelf joint venture ultimately prevailed and was awarded the contract, Australians should not be complacent about the competition posed by Indonesia in this region.

But on the positive side, increasing economic integration means increasing familiarity;

Education is an area in which Australia plays a very prominent role in Indonesia. We currently have about 18,000 Indonesian students in Australia. I understand that there are four graduates of Australian universities in the Indonesian cabinet and that the Indonesian President’s son recently graduated from Curtin university. That emphasises how important our educational links with our Asian neighbours can be. When one considers the closeness of Western Australia to Indonesia, it is quite obvious that there is great scope for the development of business and other contacts between us and there are great opportunities which Western Australia can capitalise on to maintain its economic growth.

Eggleston concludes that the Western Australian boom can continue and looks to on-going growth from China, India and Indonesia to achieve that prediction.

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Andrew Norton
Andrew Norton
17 years ago

I saw in the SMH last weekend that Perth house prices were passing Sydney’s, but nice as Perth is as a *city* it is a long way behind Sydney and Melbourne in scale, range of things going on, and diversity of people.

Chris Lloyd
Chris Lloyd
17 years ago

“Perth is ..a long way behind Sydney and Melbourne in ..diversity of people.” Yes. They have a long way to go before they can aspire to the kind of diversity the gentle folk of Cronulla and Bankstown enjoy.