27 May 2016
by Stephen Koukoulas
The parlous position of the Western Australian economy and the plummeting approval of the state Liberal Government of Colin Barnett means the July 2 federal election could hang on half a dozen line-ball seats in the west.
Having experienced the wealth explosion that came when the mining investment boom was in full swing, the people of WA are experiencing the down side of the mining depression.
They are suffering the after-effects of policy incompetence and the fact that during the boom times the Government did nothing to build a war chest of funds to support the economy to use when things inevitably turned lower.
If only there had been something akin to a mining tax to lock in revenue from super mining profits that could have been used now to support growth and jobs when some stimulus was needed.
In 2008, the unemployment rate in WA fell below 3 per cent as the mining boom absorbed every available worker and then some into the workforce. In the past six months, the unemployment rate is hovering between 5.5 and 6 per cent. The number of people in WA with a full-time job has dropped by a disconcerting 38,300 since the peak in December 2012.
At the same time, the wealth of Western Australians is being destroyed with what is a sharp decline in house prices. According to RPData Corelogic, Perth house prices are down about 7.5 per cent from the early 2015 peak and are back to the levels prevailing five years ago.
The economic bad news does not end there. Retail sales are lower than they were five months ago and state final demand has been falling for three years.
WA is in something akin to a domestic recession with the only saving grace a lift in the volume of commodities exported, which is the legacy of the increase in capacity from the prior investment boom.
With this track record on the economy, it is little wonder some seemingly safe Liberal Party seats are likely to fall at the election. Voters are not only feeling hard done by, they are genuinely doing it tough in what is probably the worst economic environment for a generation.
Because of this, WA could well be the surprise packet of the election with up to six Liberal seats at genuine risk because of these dour economic circumstances as voters vent their anger and financial hardship at the ballot box.
The Liberal-held seats of Cowan (4.5 per cent margin), Hasluck (6.0 per cent), Burt (6.1 per cent), Swan(7.3 per cent), Stirling (9.0 per cent) and Pearce (9.3 per cent) are all seats Labor not only hope to win, but are poised to win.
The betting agencies, which are offering odds on all 150 electorates including the 16 in WA, have Labor favourites in two of those six seats (Hasluck and Burt) line ball in one (Swan) and underdogs in the other three (Cowan, Stirling and Pearce).
When Labor’s task is to win 19 seats nationally to gain power, three or more seats in WA after likely gains in Queensland, New South Wales and South Australia would get them very close to victory on July 2.
There are more than five weeks to polling day and there is one data reading on each of GDP and unemployment before polling day. These will not only have implications for the reading of economic conditions, but will cast a little more light on the economic management credentials of the Government and the extent of the economic downturn in WA.
The GDP result looks like it will be a little weaker than the growth recorded at the end of 2015 and all signs point to an uptick in the unemployment rate. With the national polls clearly showing a swing to Labor, any more bad news on the economy could sway a few more voters to move away from the Government, especially in WA.