Exports grow while jobless rate falls

11/01/07
New figures have confirmed Western Australia as the nation's export and employment capital.
"The ABS figures show the total nominal value of WA exports rose by 28.2 per cent over the year to November 2006 to an historic high of $54billion," Treasurer Eric Ripper said today.
Mr Ripper said that in annual average terms, WA accounted for 33.1 per cent of total national exports.
"Our trade surplus now stands at $32.5billion compared with Australia's trade deficit of $12.1billion," he said.
"Unemployment here has fallen by 0.1 per cent to just 3.1 per cent, the equal lowest rate recorded in WA since monthly labour force figures began in 1978.
"Our jobless rate remains the lowest in the nation, with other States such as Victoria and New South Wales recording 5.0 per cent unemployment, while South Australia recorded an unemployment rate of 5.6 per cent."
The Treasurer said these differences highlighted the merits in encouraging skilled migrants to WA instead of other States, where there were fewer job opportunities.
WA's economic success was being achieved with little if any support from the Commonwealth in the form of common use infrastructure to expand and consolidate our export industries.
Mr Ripper repeated his call for a $2billion national export infrastructure fund and again urged Federal Treasurer Peter Costello to travel to WA to witness the State's infrastructure needs first hand.
"WA and other resource rich States are filling the Commonwealth's coffers and it is time to invest some of those returns in our future," the Treasurer said.
"They already receive the majority of fiscal returns from WA's major resource projects through their broad based revenue bases - especially petroleum resource tax, income tax and company tax.
"Yet they make very little contribution to the infrastructure and other costs of supporting such developments."
Mr Ripper said public sector investment by State and local governments in WA was almost $2,100 per person in 2005-06, compared with an average of just over $1,300 per person by other State and Territory Governments.
"In contrast, the Commonwealth's public sector investment in WA in 2005-06 was about a meagre $340 per person, less than the average of $480 per person it spent in other States and Territories," he said.
See attached letter sent today to Federal Treasurer Peter Costello.
Treasurer's office - 9222 8788

The Hon Peter Costello MP
Treasurer
Parliament House
CANBERRA ACT 2600
Dear Treasurer
WESTERN AUSTRALIA'S INFRASTRUCTURE NEEDS
I am writing to invite you to Western Australia to examine first hand the challenges we face in providing infrastructure to meet the needs of our fast growing economy. These challenges have led me to propose that the Commonwealth create a national export infrastructure fund to help support expansion of the nation's key export industries, including associated social infrastructure pressures.
As you know, Western Australia is experiencing an economic boom, led by the resources sector, which is expected to see the State's economy grow by an average of more than 5% per year over the three years to 2006-07, with further strong growth of over 4% per year projected to 2009-10.
The Commonwealth generally receives the lion's share of fiscal benefits from resource developments through its broad based revenue sources, particularly petroleum resource rent tax, company tax and personal income tax. The fiscal benefit for State governments is diluted through lack of access to offshore petroleum royalties (other than from the North West Shelf project) and the redistribution that occurs through the Grants Commission process.
To sustain export growth, the State's social and economic infrastructure requires significant expansion and upgrade. To help achieve this, the State Government is investing a record $19.4 billion in capital works over the next four years. Public sector investment by State and local governments in Western Australia was almost $2,100 per person in 2005-06, compared to an average of just over $1,300 per person by other State and Territory governments.
However, there are limits to our capacity to fund infrastructure requirements. While strong budget surpluses have assisted thus far, property taxes and royalties have essentially peaked, and the delayed effect of the Grants Commission process is forecast to cut our GST grant share from 10.0% in 2006-07 to only 8.6% in 2009-10.
As with the private sector, the State Government is also experiencing strong escalation in project construction costs. This is particularly apparent in infrastructure projects in small regional centres, such as Ravensthorpe and Boddington.
Indeed, there is a risk that projects with substantial national benefits will be delayed or may not proceed in the absence of Commonwealth support. I am sure you would agree this would be an undesirable outcome.
Some projects in Western Australia that demonstrate the need for an infrastructure fund are as follows:

• The Boddington Gold Mine expansion, which is expected to deliver significant benefits to both the State and the Commonwealth Governments. The cost of the social infrastructure package is estimated to be $67 million, with proposed State Government funding of $51 million and Commonwealth funding of $16 million. The State has already committed to providing $9 million to address issues requiring immediate attention. It is hoped that the Commonwealth Government will contribute $16 million through the Regional Solutions program, but there has been no commitment from the Commonwealth to date.

• The new MetroRail project between Mandurah and Perth, and the new Perth to Bunbury Highway. The Auslink Accelerated Package announced in May 2006 provided a welcome addition to Western Australia's road funding, but further upgrading of our key transport links is needed.

• The Gorgon gas project, which is forecast to improve the Commonwealth's budget balance by between $11 billion and $14 billion. After taking account of social infrastructure expenditures to service the increased population resulting from the Gorgon development, and the redistribution of net revenue benefits by the Grants Commission, Western Australia's forecast net fiscal benefit is only $300 million.

• Prospective offshore petroleum developments in the Scarborough field (off the Pilbara coast) and Browse Basin (off the Kimberley coast). These are likely to require social and economic infrastructure support, although the nature and scale of this support is yet to be determined.

• The Ravensthorpe nickel project. The Commonwealth Government's net revenues from this project will be almost seven times larger than the State's. Yet the Western Australian Government is contributing over $30 million to this project (including in the form of power and water infrastructure, road works and school upgrades), while the Commonwealth has contributed around $11 million. Infrastructure needs for this project could be significantly greater than previously forecast, requiring further State and Commonwealth assistance.

Another issue impacting on the export sector includes telecommunication service standards in regional and remote Western Australian. The State Government recently announced a State-wide Broadband Network Strategy to deliver high speed and affordable broadband access to be funded by pooling the State's current $100 million annual telecommunications spend. However, the full achievement of the strategy will depend on the Commonwealth's funding commitment.
I would also suggest that the Commonwealth could further support Australia's development needs through reforms to the national tax system, including enhanced depreciation provisions, introducing a flow-through share scheme to promote mineral exploration, and increasing the income tax zone rebates to help developers attract and retain skilled labour.
I trust that you will give careful consideration to my proposal, which I would be very pleased to discuss with you further.
Yours sincerely,
ERIC RIPPER MLA
ACTING PREMIER; TREASURER;
MINISTER FOR STATE DEVELOPMENT