Economic diversification and green trends can ensure WA’s prosperity in an increasingly protectionist world, according to Bankwest Curtin Economics Centre (BCEC).
Economic diversification and global green energy trends are key to ensuring Western Australia’s prosperity in an increasingly protectionist world, according to Bankwest Curtin Economics Centre (BCEC).
A report released by the research centre today calls for increased export diversification, as well as leveraging the state’s strengths in production to support the world’s decarbonisation agenda.
It highlights that, while the state’s current economic strength is a product of a thriving resources and mining sector and international trade, more needs to be done to secure a prosperous future.
Its modelling also highlighted the huge scale of economic benefit as a result of international trade.
Trade was found to have benefited WA households by a total $17.9 billion last year, or $16,200 for each household, a factor that reduced prices by 4.3 per cent compared to a hypothetical no-trade situation.
Goods exports accounted for 59 per cent of WA’s economy in 2021-22, compared with 23 per cent nationally.
BCEC director Alan Duncan, who co-authored the report, said the figures highlighted the dependence of the state’s economy on trade demand abroad.
“The relative scale of WA’s export sector emphasises just how much the state benefits from – and depends on – its economic relationships with trading partners,” he said.
“The WA economy benefits from natural endowments, product specialisation and market integration as well as economies of scale, and its resilience through the pandemic owes much to border protections that allowed mine sites and ports to maintain production cycles.”
The report estimated that free trade agreements signed with China, Japan, South Korea and Thailand led to estimated gains of $472 billion for Australian exports since enactment.
However, it also foreshadowed a growing level of protectionism among trading partners.
Tariffs and border restrictions were identified among the factors that negatively affected trade services nationally and in WA.
“The rising level of protectionism poses risks to open economies like Australia, particularly export-oriented states such as WA,” Professor 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.”
One particular opportunity is decarbonisation, with WA’s economy ranked 12th in the world and first nationally for complexity in renewable energy and decarbonisation technologies by a new BCEC index measuring green performance.
The index suggests the state is well positioned to capitalise on green products' capabilities.
According to BCEC, the state’s green exports increased from just below 50 per cent of total exports in 2015 to more than 65 per cent in 2021, which translated to a more than threefold increase in value terms.
BCEC defines green goods through its index based on a list of 575 products connected to decarbonisation, cleaner production, environmental protection or improvement.
The numbers incorporate categories including iron ores and concentrates, which are designated as environmentally preferable materials and products, as well as renewable energy production and storage products.
Critical minerals such as lithium are also considered green, as is hydrogen.
The rate of green exports as a proportion of all exports nationally was 40 per cent in 2021.
A series of green initiatives were among a number to attract state government co-funding support this week under the state’s allocation of $148 million through its investment attraction fund.
That funding was designed to support industries identified in the Diversify WA: Future State report released in April under then-state development minister, now premier, Roger Cook.
Report co-author Daniel Keily praised the funding as a step in the right direction on WA’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 a lot of meat on the bones of their diversification strategy, which, as we’ve said in this report, is essential in moving beyond WA’s heavy reliance on the resources sector for its continued economic success,” Dr Keily said.
Among the projects supported with funding were the creation of nursing and allied health; culinary arts and ICT schools at Stanley International College; and tourism initiatives by Spinifex Brewery in Broome, Rose Hotel Bunbury in Geraldton, and European Foods Wholesalers in the Swan Valley.
“Continued investment should be made in the WA brand to support the tourism and international education sectors in key and emerging markets,” Dr Kiely said.
He said for these sectors to be further supported, housing supply issues would need to be addressed to facilitate accommodating skilled workers, international students, hospitality workers and tourists across the state.
Professor Duncan said getting the environment right for diversification would facilitate the state and nation’s continued prosperity.
“If we get it right, Australia is in a tremendous position to benefit from the changing face of global trade,” he said.
