With wealth currently shifting and steady investment pouring into the region in the form of large scale energy and mining projects, the need for infrastructure and property has seen a boom like never before. Jackson McDonald is a Globalaw member and leading independent Western Australian law firm with 230 people and a 90 year history. Richard Sandover, chairman of Jackson McDonald, notes, “Companies considering expanding their operations into WA need experienced counsel from firms like Jackson McDonald who are connected at government and business levels and can advise on how to grow sustainably in the years following the prosperous period.”

 

Western Australia’s population of 2.5 million has seen steady growth of 3.5 per cent  in 2012 2013, and was above annual average growth of 2.5 per cent in the past 10 years. In their quarterly report COMMSEC analysed 8 key indicators of economic growth in Australia. The piece noted that WA remains the top performing economy in Australia, and while there has been a slowdown in energy and mining investment in WA, it is fair to say this has come off record levels of investment.  Arguably, this is welcomed in order to take some heat off of the economy and the only moderate growth in wages.

 

Leveraging the growth of the Asian economy, Western Australia has built an economic structure that is responsible for a significant share of world production in a range of commodities including 7 per cent  of liquefied natural gas (and growing), 21 per cent  of global iron ore, 14 per cent  of alumina, 13 per cent  of nickel and 6% of gold production, as well as a range of agricultural products such as wheat, canola, barley and wool. 

By the end of this decade exports from WA are forecast to be well over 50 per cent  of Australia’s total and possibly 60 per cent. Although there are signs that the peak in energy and mining sectors investment is imminent, business investment hit its fifth highest quarterly level on record with WA business spending AUD$17.6 billion in the quarter.  As the mining and energy construction crests, there are signs of renewed investment in agribusinesses in WA.  This is reflected in the significant investment in irrigated land and infrastructure in the Kimberley Ord River Scheme stage 2 in the north of WA.

 

All this prospective development requires massive investment in the sectors themselves, and most importantly, the infrastructure needed to support these projects for the long term.  

 

Perth property market

 

The growth in the economy has seen significant commercial, retail and residential development over that time.  For example, the State Government is developing a CBD river precinct adjacent to the professional/finance/business precinct centred around St Georges Terrace, to be known as Elizabeth Quay, which a number of global companies are proposing major developments in.  

 

Trends we are seeing

 

The generally optimistic outlook has been tempered by a slide in business and consumer confidence which began in the September quarter 2012 and has only continued.  The impetus was a fall in the price of iron ore and the announcement by Woodside that it had decided not to develop an onshore LNG plant in the Kimberley coastal region of WA owing to cost overruns of in the order of billions of dollars.  Rather, it proposed to develop offshore LNG plants using the new cutting edge floating LNG platform technology being developed by Shell.

 

Perth is now internationally recognised as a global hub for mining and energy.  With that recognition comes a high level of innovation within the industry.  This level of expertise and innovation leads the way for companies to take that knowledge and use it in an international context.  This is evident in the more than 200 Australian mining and exploration companies undertaking activities in Africa of which in excess of 80% by number are based in Perth.  

 

Trends that Jackson McDonald is seeing within Western Australia include:

 

• An expansion in property development and property investment generally reflecting the recent population growth

• Intensification of development in the Perth CBD and adjacent areas of high rise office, commercial and residential apartments

• Increased investment in business and companies servicing the mining and energy production (as opposed to mining and energy construction)

• Mining and energy companies focused on cost control and increasing productivity

 

Whilst the rapid expansion in mining and energy construction is tailing off, WA is expected to continue performing strongly with significantly increased mining and energy production from a number of major projects.   

 

According to Will Moncrieff, head of mining at Jackson McDonald: "Mining will continue to be a major driver of prosperity in WA.  However, the boom has changed and we are seeing our clients looking at their productivity and cost control.  The M&A market has seen a shift in companies looking at acquiring their supply chain to increase efficiency and control of their product."