Today’s economic growth figures reveal Western Australia’s domestic economy has operated on a treadmill of low growth for the past year, reflecting the need for both State and Federal Governments to look at options to improve the competitiveness of businesses to stimulate higher growth.
A 0.2 per cent contraction in the September quarter leaves WA’s domestic economy with state final demand growth of zero per cent in year ended terms.
By this measure, the WA domestic economy made no progress since the same time last year.
In the last quarterly data to be released this decade, WA had the second weakest domestic economic performance of any State, with national domestic final demand up 0.2 per cent.
The flat outcome is in line with Chamber of Commerce and Industry WA (CCIWA) forecasts.
The result is propped up by better-than-forecast growth last quarter, revised from 0.8 per cent to 1.4 per cent in June. Growth in government consumption expenditure was not enough to offset a 4.5 per cent decline in business investment this quarter. Only a kick in machinery and equipment investment last quarter enabled the ongoing decline in business investment to be contained at 7.6 per cent in 2018-19.
After falling for the last five quarters, investment in WA dwellings increased by a slim 0.3 per cent this quarter. WA households continue to feel the pressure, with consumption rising only 0.1 per cent this quarter. Increased spending on essentials was mostly offset by weakness in discretionary spending on items like clothing and footwear, down 0.9 per cent.
Today’s results demonstrate that nothing can be taken for granted in the search for WA’s economic recovery.
There are a number of recent decisions that have been made to support strong economic growth. These include fast-tracking federal infrastructure projects, the creation of the Australian Business Growth Fund and lessening the payroll tax burden on WA businesses. These decisions should support stronger growth in the coming year.
However all tiers of Government need to look at options to further boost the competitiveness of WA businesses. CCIWA has welcomed the emphasis of the Federal Government on releasing the “animal spirits” of business. The State Government has also indicated its commitment to removing red tape that stymies business investment and growth.
In the coming months, it is critical that these efforts start to deliver real outcomes for the business community. CCIWA urges the State Government to accelerate the Streamline WA process, repeal its outdated shopping restrictions and enable Roe 8 to be independently assessed. All three items should help WA achieve higher economic growth.
