Wednesday, May 07, 2008

Go West! But we're not. And it's surprising.

It's where the action is, right?

On the eve of Western Australia's Thursday
budget, Shane Wright, economics editor of the West Australian probes the mystery.

Go West! Life is peaceful there
Go West! There in the open air
Go West! Where the skies are blue
Go West! This is what we’re gonna do…

- The Village People

The Village People may not have known when it was time to give up disco, but the message contained in their 1979 anthem is one you would think should be adopted on Australia’s East Coast at every chance.

With the WA economy by far the strongest in the land, a resources boom likely to fuel it well into next decade, beautiful beaches, great weather, you’d have thought Sydney, Melbourne and Brisbane airports would be choked with future West Australians.

But it ain’t necessarily so.

Indeed, the failure of WA to attract fellow Australians across the Nullarbor is startling...

Figures from the Australian Bureau of Statistics highlight that while the State might be going through an economic boom unparalleled since the gold rushes of the 19th century, WA is just not an attractive destination to people from the East.

I’ve compared population change in WA and Queensland, the other big resource state, whose residents see the sun rise over the Pacific Ocean everyday, rather than set over the Indian Ocean.

WA’s net natural population increase since early 1996 is a touch over 166,000 people. Queensland’s for the same period was 304,000, or about 1.8 times that of WA.

On that count, taking into consideration WA’s smaller population, the State is actually doing better than the Sunshine State.

Next, let’s compare net immigration. WA’s net immigrant intake was 190,000 compared to Queensland’s 900,000, or about 4.7 times that of WA.

Considering Queensland’s high profile overseas this could be expected. But it is still not an overwhelming difference between the two.

But then there’s net interstate migration.

Since early 1996, the net interstate migration of WA has grown just 13,314 – and most of that has been since September 2003. That’s just 13,000 Queenslanders, Victorians, New South Welshmen and women, Taswegians, South Australians and Territorians (of both variety) who’ve bothered to call WA home.

Now look at Queensland. The net interstate population has swelled more than 300,000 – or 22.6 times that of the growth of WA.

This inability to entice easterners over the Nullarbor wouldn’t be such an issue if WA wasn’t going through such an extreme shortage of skilled and unskilled workers.

Australian National University economist Andrew Leigh believes too much has been made of the "skills shortage" – arguing its much more akin to wages being too low.

He uses a simple supply and demand graph to show that if the supply of labour is to lift to meet demand, then the price – or wages for workers – has to lift.

Not that WA has done poorly on this front.

Over the same period as the migration figures, average ordinary time earnings in WA have climbed 76.5 per cent. That’s the highest growth rate in the nation, with the ACT number two at 71.7 per cent. Queensland wages have risen by a respectable 70.5 per cent.

Based on Dr Leigh’s argument, WA wages are going to have to grow much, much more before we overcome the shortage of skilled workers.

Nineteenth century US newspaper editor Horace Greeley is most often attributed with using the phrase "go west, young man", encouraging the footloose and fancy free to develop the western reaches of America.

Look at the West Coast of the US today. You have cities the size and importance of Los Angeles, San Diego, Portland, Seattle and San Francisco.

Compare that to WA – there’s Perth and then, well, virtually nothing (sorry to those residents of Mandurah, Bunbury, Busselton but it’s hard to compare them to LA or San Fran).

Maybe that’s one of the reasons for the problem of encouraging interstate migrants. If you’re moving from regional Victoria, do you head for Melbourne, Sydney, Wollongong, the Sunshine Cost, the Gold Coast or Brisbane – or do you leave the family and friends with just one "real" choice, Perth?

And on the same related issue; while house prices have famously burst through the roof in Perth, they’re at the mezzanine level in Brisbane. The median price of a unit in Perth is the highest in the country, while that of a free-standing house is second only to Sydney.

Then there’s the very simple problem of geography. When Auckland and Wellington are closer to Sydney and Brisbane than Perth, it will always be an uphill battle to woo people from the East.

While ever a flight to Perth from any of the East Coast capital cities is more than twice the price, and duration, of any between the East Coast capital cities – and not through the Perth domestic airport – there is that enormous financial and mental barrier.

Whatever the problem (and I’m sure I’ve just touched upon a few) it is one that goes to the heart of the issues that will confront WA in the years to come.

Maybe its time for the Carpenter Government to think outside the square to entice people West. What about a Village People inspired advertising campaign?