Addressing a CEDA audience in Perth, Treasurer the Hon. Ben Wyatt said the WA economy is showing positive signs.

“We are seeing decreasing unemployment, various confidence measures are up, there is strong growth in machinery and equipment investment and overall private investment is beginning to bottom out,” Mr Wyatt said.
However, Mr Wyatt said, WA still faces significant economic challenges. 

“First, our economic fortunes are still very much tied to commodity markets,” he said.

“While the government is thankful for having a strong mining sector in WA, the fact is the less diversified our economy the more exposed we are to future economic shocks.

“Secondly, our population continues to age. This is putting upward pressure on health and aged care spending and is driving up the number of retirees per working-age person.

“Third, and importantly considering the nature of our economy, our competitors in other countries are relentlessly becoming more efficient, increasing the pressure on us to use our scarce resources ever more productively.

“And fourth, our productivity growth is too low.”

The need to deal with these challenges well has prompted the government’s reform program which, he said, is focused on creating a more diversified and resilient economy, more investment in jobs and entrepreneurialism, higher incomes and more inclusive growth.

“If we don’t address them (economic challenges) our state will generate fewer jobs and have lower living standards. This is why the government is so determined to diversify,” Mr Wyatt said.

“If we can successfully grow and diversify the economy then we can achieve the sort of society that Western Australians aspire to; a society that can better withstand global economic shocks and provide its people with economic security.”

Mr Wyatt said four key mechanisms are driving the government’s reforms: facilitating competition; better informing consumers; creating better incentives; and better regulation.

“Together these sorts of reforms promote competition, innovation and investment which drives overall productivity and with it living standards,” he said.

“It’s important to emphasise that greater productivity doesn’t just drive better economic outcomes, it helps drive better environmental and social outcomes.”

Mr Wyatt said the government was also committed to building capabilities in the public sector and improving efficiency of markets, including the WA electricity market, as part of its economic reform program. The government will also evaluate reforms to ensure lessons from them can be fed back into the program. 

Mr Wyatt also linked productivity to boosting wages, noting that wages growth has been stagnant since a fall in productivity.

“The reason we’re doing it is to lay the foundations for WA to develop into a modern and thriving economy; an economy that provides for inclusive growth, an economy that can take on the challenges of today’s world and win.”