Month: November 2018

Western Australia: a place to live rather than visit?

I’m now in Hobart, having moved from Australia’s largest state to its smallest. We only spent a six days in WA, and purely as a tourist. We didn’t visit anybody living here. So my view is inevitably superficial – but I hope it will still be of interest.

WA is vast, taking up one third of the Australian continent. It is mostly empty of people. 80% of its population, we were told, lives in the Perth area. Most of the rest live in the south western corner, which includes Margaret River. We didn’t get beyond these populated areas.

Central Perth is underwhelming. It has an undistinguished skyline of the usual tower blocks. Its setting, on the Swan River has potential, but the urban planners have given almost all the riverside to roads and speeding motor traffic. Only a small harbour area is free of traffic, and that is now mainly a building site. There is a pedestrianised shopping precinct but it is nothing special. There is a lovely park, King’s Park, just off centre (the largest central urban park in the world they claim), but even this is rather spoilt by trying to make it accessible to people in cars. The best views over the city are next to a busy road. There is quite decent public transport but car is king. Outside the centre there is the usual Aussie suburban sprawl, including some lovely waterside properties, once the roads have moved inland. These are surprisingly dense; all houses are detached, and they are mainly single story, but the backyards are tiny. The houses are cheek by jowl. Once you have acquired your building plot, the thing to do apparently is to cover it almost entirely with one storey of house. This holds throughout the residential districts of WA we saw. This may be a countrywide trend, but here even the posh homes on the river side looked a bit squashed up against their neighbours.

The best bit of the Perth area is the old port of Fremantle. A lot of old buildings have survived and they aren’t dominated by newer ones. You can have a fish lunch on the fishing harbour watching dolphins near the fishing boats (real, working ones) without traffic whirring by. The port itself isn’t all that big. There were just three ships there when we visited, two stock carriers and a single container ship. Barcelona it isn’t. WA’s vast mineral exports don’t go close to populated areas.

Outside Perth the main attraction is the continent’s southwest corner, around Margaret River. This is lovely. An attractive coast, with boutique farming inland, featuring its now famous vineyards. It’s a popular holiday district and deservedly so. We perhaps saw it at an ideal time of year, in between the wet winter and hot, dry summer. It was verdant, and the temperature in the very pleasant mid-twenties. There are plenty of wilderness sights in WA, but we didn’t have time to sample them. We will next time. And there could be a next time. We flew here because of the new Qantas non-stop flight from Heathrow by 787 Dreamliner. This was a success, and we prefer it as a way in to breaking the journey to the east cost to Dubai or Bangkok. But if they manage to put on a nonstop flight to Sydney, that might be a tempting alternative.

This is a mainly economics blog, so what could I make of the WA economy? It seems to be healthy and growing, though homeless people were to be seen frequently in central Perth. This appears to be mainly about mining, of which iron ore is the most important, but which covers a multitude of other things. This happens in the wilderness and is quite astonishingly destructive of the local environment. But as almost nobody lives there, that doesn’t seem to be an issue. The presence of aboriginal inhabitants is light. In the south west we only found any serious reference to them in the art gallery. Doubtless in the outback their presence is stronger, but the mining businesses clearly don’t have too much trouble.

The mines do need quite a few people, even if they aren’t sent down holes in the ground when you can simply remove all the rock that is in the way. These are flown in for periods of one to three weeks from Perth and outlying towns. As these workers spend money in their home towns, and go on holidays, this drives much of the rest of the economy, or so we were told. The Economist suggests that automation is far advanced in the mines, and fewer workers are needed. There was no sign of that – perhaps because this affects workers shipped in from outside WA to a greater extent. There are a lot very wealthy people on the back of the mining boom – who in turn invest in the boutique wineries in Margaret River, as well as fabulous properties to live in. But there seem to be plenty of decent mid-level jobs too, which are the key to a broadly prosperous economy. One thing we noticed was that there were quite a few older workers – including just about all the tour guides we used.

So my rather superficial verdict is that Perth and Margaret River are very pleasant places to live, with all the civilised comforts. If there are world-class tourist attractions they are probably in the outback, though apparently the surfing is world class too. But if you are visiting Australia anyway, it’s a nice place to go, though still over three hours flying time from most other places.

Is Australia a neoliberal success story?

I have just started a six week tour of Australia. Right now I am in Perth pictured), our first stop. Australia is a country I know quite well. I have visited it in every decade since the 1980s. In the late 1990s and early 2000s my visits were frequent as I was working for an Australian-owned company. But my last visit was in 2006. I am interested to see some new places (Perth is one; Tasmania will be another), and also to understand how the country has developed.

I have just finished reading a special report by the Economist on the country. It paints it as a neoliberal beacon; it doesn’t use that word of course – neoliberals never use it themselves. That is an interesting thought to challenge while I’m out here. The country is a remarkable economic success story, with continuous growth since 1991: a better record than any other developed country. It has weathered two financial crises (the 1997 Asia crisis, and the 2008-09 crash), and several twists of the commodity cycle, impressive for a country for whom mining is so important. Doubtless raw materials and hitching the country’s fortunes to China’s economic growth, play an important role – but other Southern Hemisphere countries do that without Australia’s success. Its economic policies have a clear neoliberal bent. Fiscal policies have been conservative; pensions and healthcare have been substantially privatised. The currency floats freely. Levels of immigration are high. It stands as a reproach to the conventional wisdom of the left, which hates the involvement of markets in public services as well as governments aiming for low levels of public debt. It also stands as a reproach to the conventional wisdom of the right, which holds that multiculturalism is doomed to failure, and that high levels of immigration undermine social cohesion.

These headlines cover a much more complex picture, of course. In fact the Economist’s report is maddeningly shallow. But Australia is an interesting case study. To me the it looks as if the critical element to its success, which helps explain the way it has beaten the conventional wisdom of left and right, is healthy incomes across a broad stretch of society. This allows people to take more responsibility for health and pension expenses. It also makes them less stressed about the economic impact of immigration. But why? That is one of the questions I want to gain insights into by talking to people who live here.

Maybe Australia shows that it is too early to write off neoliberalism. Interestingly it is making a comeback in South America, as Brazilians follow Argentinians (and others) in turning their backs on leftist economics. Indeed outside some developing economies (including China perhaps), there seems to be no example of a successful economy that has abandoned neoliberal tenets. Even Scandinavian economies have tilted in the neoliberal direction in the last decades. And yet things are clearly not right in most neoliberal economies, including Britain’s. A lot of this has to do with pressure on those with middle and lower incomes, and in the phenomenon of left-behind places: middling and smaller towns, and rural areas. It will be interesting to understand how Australia has met these challenges, if, indeed, it has.