The state of Western Australia opened its borders on Thursday after largely keeping them closed for nearly two years.
The effects have been varied. Those with family in other states, or those kept out or refused entry to come home, are tired and angry. However, economically the resource-focused state has done well.
A release from the Australian Bureau of Statistics in early March found Western Australia was the best-performing state throughout the pandemic, with what it terms “state final demand” up 7.2% since 2019. It is a measure of domestic spending and doesn’t take in to account exports.
It grew 6.6% last year alone. When exports are added in, the state’s economic growth was 4.6%.
A Commonwealth Bank report in January this year found Western Australia was the strongest state on relative economic growth terms and said for the year to September 2021, economic activity was 37.3% above the decade’s average level.
On the downside for the population, rental prices and availability have gone back to mining boom levels, pushing many out of the market. House prices have also risen fast.
Despite diplomatic blowups through the 2020-21 period between Canberra and Beijing, LNG and iron ore weren’t hit at all. The price of coal was on the rise throughout 2021 after China’s plans to curtail imports of thermal coal from Australia’s east coast backfired.
It is petroleum, mostly LNG, iron ore, grains and some gold exports that underpin the state’s economy. Chinese tariffs on some goods such as barley, crayfish and wine have hit the state, but its demand for iron ore was strong when prices were high and have stayed that way through the price dip.
China became Australia’s largest market for LNG last year, surpassing Japan. Western Australia supplies two-thirds of Australia’s 80 million tons per annum exports, although traditionally far more goes to Japanese contracts than Chinese.
This resource-heavy profile was one of the reasons for keeping the state shut. A serious outbreak at a mine site or offshore platform could have had serious implications and many fly-in, fly-out workers arrive from interstate for work.
The two-week hotel self-isolation rules put in place by the mining and gas giants were designed on the fly and put serious stress on workforces already operating in tough conditions pre-pandemic. Lay-offs and longer shifts also hurt.
A report made public this week by Australia’s offshore safety regulator, which surveyed 502 oil and gas workers, found they suffered a higher level of mental stress through the pandemic than the rest of the population.
But while the state of Victoria suffered through one of the longest lockdowns in the world, Western Australia spent only a few weeks in early 2020 locked up, and a couple of stretches of a few days through 2021.
The border was set to open a month ago, but in January the premier reversed course, citing the spread of Omicron and a still-low rate of people with a third vaccination.
The main issues were that the state was able to lock its borders before the virus had really taken hold, the effect large-scale outbreaks could have on the resources sector and, importantly, that the state’s health care sector couldn’t handle a large outbreak.
On March 3, there were just under 2,500 new cases, 22 hospitalizations and one death. This stands in contrast to the eastern states’ surging case numbers of tens of thousands daily. Stage 2 restrictions were put in place this week, with limited venue capacity and indoor gatherings capped at 10 people, but overall life will go on.
Labor Party cleans up
Business leaders, once described by Australia’s most vicious business columnist Joe Aston as “15 businesspeople who share the same stockbroker, GP, babysitter, hairdresser and usually grandparents,” were happy to keep Covid-19 away from their operations, even as their organizations struggled to source skilled workers and equipment, or had to stop work to keep the disease out of remote indigenous communities.
Voters were also. Western Australia’s Premier Mark McGowan’s Labor Party won a second election so resoundingly that it took all but five lower house seats.
The country-focussed Nationals were in the unusual position of forming an opposition, while the conservative Liberal party, which ran the state for 11 years through the mining boom, took two seats. The state has become Australia’s first one-party democracy.
However, by late 2021 the most senior business leaders were calling for borders to open, seeing isolation as a longer-term economic drag, putting the centrist, business-friendly Labor premier under more pressure.
Conglomerate Wesfarmers said it was “impossible” to do business in the state at the beginning of February, although its threats to move its headquarters to Melbourne were largely hot air.
Later the same month, Shell CEO Ben van Beurden blamed the border closure on the slow restart of his company’s gigantic floating LNG vessel, the Prelude. After a fire knocked out operations, half the staff were evacuated and production shut down. He told an earnings call that repairs were taking longer thanks to the border closure.
“To get a vendor specialist in means that person will have to quarantine for weeks before they can go onboard, so these problems compound the issue a little bit, but also we want to make sure when we restart that we have resolved the problem,” he said.
In fact, a safety report from the offshore regulator – which is overseen by the Commonwealth government and not the state – found far more serious issues.
Meanwhile, billionaire mining magnate turned failed politician Clive Palmer has taken the premier to court, arguing the border closure was unconstitutional, as were “mandatory” vaccinations.
He suggested McGowan had a “license to kill” and sponsored ads on YouTube for his Palmer United Party, asking the politically faithful to “tear down this wall.” Palmer now has Covid-19.