West Australian business, Treasurer say economy emerges from mining bust - The Australian Financial Review

An increase in iron ore prices is improving confidence in Western Australia.

Western Australia has started to emerge from one of the biggest economic downturns in recent Australian history, the state's leading business group and Treasurer Ben Wyatt said.

Consumer confidence is at its highest level in four years and 76 per cent of residents believe the state economy will strengthen or not deteriorate over the quarter, up from 5 per cent three months earlier, according to a survey by the Chamber of Commerce and Industry WA.

For a state that last year experienced its first economic contraction on record, the survey suggests there has been a remarkable turnaround in how West Australians feel about their prospects.

"I am not surprised but very pleased," Treasurer Wyatt said yesterday. "The decline out of the mining boom hopefully now is over and we can expect some growth over the next 12 months."

Western Australia Treasurer Ben Wyatt and Premier Mark McGowan with their first budget. An improving economy could raise billions in extra taxes. Mogens Johansen

Economic backwater

Falling prices for iron ore and oil hit the state hard, a problem that was compounded by the completion of several big resources projects, which cost thousands of people their jobs.

At its peak, 3000 people were leaving the state every three months and the economy shrank 2.6 per cent last financial year, sending some of the highest house prices in Australia plunging and turning boom-town Perth into an economic backwater.

Now, housing has stabilised, commodity prices are up and businesses are starting to invest again. The number of houses and apartments for sale in Perth increased 3.4 per cent in November from the previous month, which was slightly above the national average.

"The last three months have seen a consistent but subtle increase in values" in Perth, said Tim Lawless, the research director for property analysis firm CoreLogic.

The latest figures show 87,600 people work in West Australia's mining industry, down from 96,400 a year earlier.

Importing miners

Some mines are being forced to import workers from Queensland because of emerging local labour shortages, according to the Chamber of Commerce and Industry's chief economist, Rick Newnham.

"The green shoots are being felt across the economy," he said. "For things to get better they just have to stop getting worse."

Rio Tinto, BHP and Fortescue Metals Group invest for long periods and aren't overly influenced by short-term price fluctuations, Mr Wyatt said.

Even though resources companies are important to the state's economy, the recovery is broader, he said. Legal and accounting firms in Perth servicing Asia are busy too, he said.

One of the biggest shifts in consumer sentiment, which measured the last three months of 2017, were concerns about political stability.

At the start of the year, 70 per cent of people said the domestic political environment was a major influence. The figure fell to 56 per cent by the end of the year.

The drop coincided with the defeat of Premier Colin Barnett's Liberal government in March by Labor leader Mark McGowan, whose government is likely to receive billions in extra taxes if the turnaround continues.