VZCZCXRO5783
RR RUEHPT
DE RUEHBY #1003/01 2750712
ZNR UUUUU ZZH
R 010712Z OCT 08
FM AMEMBASSY CANBERRA
TO RUEHC/SECSTATE WASHDC 0275
INFO RUEHPT/AMCONSUL PERTH 3899
RUEHDN/AMCONSUL SYDNEY 3835
RUEHBN/AMCONSUL MELBOURNE 5626

UNCLAS SECTION 01 OF 02 CANBERRA 001003 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD ENRG AS
SUBJECT: WESTERN AUSTRALIA ECONOMY - MORE THAN ROCKS AND 
GAS? 
 
¶1. (SBU) Summary:  Canberra-based econoff visited Perth, 
Western Australia (WA) September 18-19 for meetings with 
local government and business figures.  On this trip, econoff 
hoped to meet with people to discuss topics OTHER than 
Western Australia's booming resources sector, which includes 
nickel, iron, natural gas, and all sorts of other minerals 
like zircon, aluminum and gold.  But it is clear, despite 
some prospering industries like shipbuilding, that mining and 
energy are the main game in town for driving economic growth, 
and appear destined to remain so.  End summary. 
 
¶2. (SBU) Canberra Econoff and Perth-based economic assistant 
met with John Shute, manager for the Americas in the West 
Australian Government's Department of Industry and Resources' 
(DIR) Market Development Branch, senior research officer Pam 
Reynolds, and David McCulloch, the acting head of the DIR 
Market Development Branch.  They gave an overview of state 
efforts to spur economic development and covered some of the 
non-mining/energy sectors of the WA economy.  One of the 
biggest employers in the Perth metropolitan area is the 
shipbuilding industry, centered on the Australian Marine 
Complex (AMC) 14 miles south of Perth.  Shute described this 
as an A$500 million per year (US$400 million at current 
exchange rates) industry that directly employs over 2500 
people.  The AMC, launched 50 years ago as a joint initiative 
of the WA and Federal governments, boasts Australian 
shipbuilder Austal as the largest tenant and employer (1400 
jobs) and has a wide range of companies in the shipbuilding 
and marine support sector.  Per Shute, 50% of Australia's 
commercial shipbuilding production takes place in the AMC 
(the rest is mostly in Tasmania).  Products include fast 
ferries, luxury boats, defense vessels for the GOA, 
commercial fishing craft, and marine research vessels.  AMC 
focuses on "the top end of the value chain" rather than 
trying to compete with lower-cost shipyards in countries like 
Korea and China.  Demonstrating the importance of the "rocks 
and gas" sector, Shute added that the growth of off-shore 
petroleum and natural gas fields off of northwestern WA had 
provided significant spurs to AMC businesses, which build and 
maintain boats and other items used in servicing off-shore 
oil and gas rigs. 
¶3. (U) WA is also producing innovations in environmental 
management - for example, Shute noted Perth's hydrofuel cell 
powered buses, biofuel and biodiesel research, and new 
developments in waste and water management.  Shute said WA's 
efforts in water management and the development of 
salt-resistant plants as possible sources of biofuel material 
that would not compete with food crops for arable land have 
attracted attention from other dry places like Israel. 
¶4. (U) Shute said WA has a "worldwide" reputation for 
fisheries management, in particular for rock lobsters.  WA's 
coast is relatively poor in nutrients, Shute said, thus by 
necessity requiring more expertise and leading to more 
careful management of fisheries.  He also noted growing 
investment in information technology and communications, 
although significant elements of that are in areas like 
special data and imaging, designed for use in mining, with 
some spinoff applications in the medical and computer gaming 
fields.  Like Australia as a whole, WA is also growing as an 
exporter of education services - but much of this represents 
people coming to WA for technical or university training in 
mining and resources extraction. 
¶5. (U) But resources overwhelmingly remain the top dog when 
Q5. (U) But resources overwhelmingly remain the top dog when 
it comes to the state's exports (WA exports are 14% of 
Australia's overall exports); of Western Australia's top 10 
exports by value in 2007, eight were various WA-produced 
metals and ores, crude petroleum, and natural gas.  The other 
two were non-monetary gold (much of which was in fact 
re-exported after being brought to WA from abroad for 
processing) and wheat.  Minerals and energy comprised 85% of 
WA  exports in 2006-07 (and 30% of the overall state 
economy); agricultural products were 8% and manufactured 
items 5%. 
¶6. (SBU) The minerals focus was evident in econoff/econ 
assistant's meeting with the American Chamber of Commerce in 
Perth.  After discussing resources and defense, General 
Manager for Western Australia and Northern Territory Penelope 
Williamson said they were trying to "get another demographic" 
to join AmCham WA.  They have attracted some small software 
companies that have resource industry customers.  And 
membership includes many of the normal AmCham members - 
hotels, banks, and other international businesses.  But the 
focus for AmCham in WA remains largely on the booming 
resources sector; the one annual trip to the US that the 
AmCham in Perth organizes for members is to fellow resources 
hub Houston.  (AmCham now is adding a second annual trip that 
focuses on the marine and defense industries.) 
¶7. (SBU) A meeting with the Chamber of Commerce and Industry 
for Western Australia (CCI) also underscored the dominance of 
 
CANBERRA 00001003  002 OF 002 
 
 
mining and energy.  As Executive Director for Economic Policy 
John Nicolaou noted, so much of the investment in WA is 
centered on resources that it is "hard to remove yourself 
from resources."  CCI noted that construction is flourishing, 
and so are services such as lawyers and accountants.  But 
resources business is a significant source of growth for 
construction, law, and accountancy.  Nicolaou noted that 
health technology is doing well in WA, home to two Nobel 
Prize winning doctors.  CCI  stressed the growing role of 
Perth, along with Houston, Aberdeen and Stavanger as a 
"global hub" for mining services - technology, software, 
management, and exploration expertise and support.  But they 
were unable to quantify the size of the mining services 
sector, noting that the Australian Bureau of Statistics does 
not measure it directly, simply lumping it into the overall 
mining sector. 
¶8.  (SBU) Comment:  During the visit, Econoff had an 
interesting visit with French defense, aerospace, and 
security company Thales' Perth offices; Thales showed off 
some of the work they are doing for the Australian defense 
department and other security-related projects.  But despite 
hearing about shipbuilding and some other projects and a 
little about the export-oriented agricultural sector, the 
attempt to learn more about the non-resource parts of WA's 
economy, and the almost automatic return of WA government and 
chamber of commerce types back to the word "resources" during 
attempts to discuss other economic activity in Western 
Australia, underscored the dominance of mining and energy for 
this huge chunk of the Australian continent.  Given Western 
Australia's geographic isolation, dry climate, and small 
population base, this does not appear likely to change in the 
foreseeable future.  End comment. 
¶9. (U) This message was coordinated with ConGen Perth. 
MCCALLUM