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An article written in 2006. How true does it hold today?
August 14, 2006
A resource veteran of 30 years, Harris says he has never seen a wave of wealth like it.
Neither has anyone else. The closest would be the mad, bad 1980s when Alan Bond and Laurie Connell were guzzling Moet champagne by the crate and buying van Gogh paintings for a laugh.
But this time it's much different. This time everyone's sharing in the wealth. This time the money is coming from China, South Korea, Japan and India, not out of the pockets of elderly investors or via some dodgy corporate deal scribbled on a restaurant serviette.
This is real money and it's making a real difference to real people. While the northern towns of Karratha, Newman, Tom Price and Port Hedland are bulging at the seams servicing multi-billion-dollar projects such as the North West Shelf and massive inland iron ore operations, fly-in/fly-out work practices mean that Perth remains the funnel into which most of the money flows.
Those not on the train are jumping on quick. Many people desperate to capitalise on Perth's extraordinary property market, both office and residential, are camping out overnight in freezing conditions to make sure they are in the line to buy a block in the numerous subdivisions opening up north and south of the city. For 400sqm of flattened sand they are willing to pay up to $250,000 in instant suburbs, with names such as Success and Auburn Grove, that were roadside scrub until recently.
It's hardly surprising. Perth, once boasting the most affordable housing in the country, has leapfrogged Brisbane and Melbourne to be the second most expensive residential market behind Sydney. House prices jumped 16 per cent last year and are forecast to go above 20 per cent in the coming 12 months.
Tens of thousands of West Australians who had relatively small mortgages have become millionaires almost overnight. At the upper end of the housing market, things are looking rosy. In the past year, two of Perth's most expensive riverside mansions have been snapped up by two Chinese mining magnates for a total of $14 million. They paid cash.
"I've had my best year in 27 years of real estate," says Willie Porteous, real estate agent to the rich and husband of Lang Hancock's widow, Rose. "I've sold over $200million worth of property in 12 months and it's not to foreigners. I'm selling mostly to local people who've made money on the stock market and industry."
The trickle-down effect of extensive investment in the state's resource sector - combined with a rise in the value of mining shares - can be seen in luxury goods sales. Gucci has just opened its newest Australian store in Perth, bypassing alternative sites in Brisbane and Adelaide.
One Perth retailer of pearl jewellery says sales are up by 25 per cent, driven by middle-income buyers "who find $2000 to $5000 pieces are now easily within their reach".
Luxury boat sellers have noted a trend towards bigger boats in the $700,000 range; the downside is that available yacht pens in Perth have run out.
New vehicle sales in WA went up 20 per cent last year, against only 3.5 per cent nationwide; German luxury car company Audi enjoyed a staggering 70 per cent increase in West Australian sales last year.
Affluence is also visible in Perth's middle-class suburbs. Harris lives in a large two-storey house in Winthrop, near Fremantle. In his drive is a brand-new $30,000 Holden utility bought for cash by 22-year-old son Michael, an apprentice welder working on resource industry contracts.
Harris Sr says his workmates are moving to fast-growing satellite towns such as Mandurah, an hour's drive south of Perth, where canal estates are popular.
"My colleague is 32, he's got an $800,000 house near the water, plasma TV screens, private schools for the children, an investment property that he negatively gears," he says. "People like him are not going into hire purchase, they are paying cash."
Transport manager Ian Kent feels the benefits and the burden of the boom. His employer, Mitchell Corp, is so short of drivers it is planning to set up its own driving school. "Driving a triple road train requires a level of skill," Kent says. "And they are paid very well. Most would be earning between $80,000 to $100,000 (a year) for 10-hour days. But if you went to schools and asked: 'Who wants to be a driver?', you wouldn't get a hand up."
Seven years ago, Kent's employer was a small Perth operation carting explosives, fuel and mining supplies to the north's mineral provinces. Today it ranks as Australia's fifth largest transport company, assembling its own gigantic road trains and ore trailers.
"China has had a major impact," Kent says. "Some mines in the Pilbara are going to double in size in the next few years. They're predicting a tripling of usage of explosives, fuel, lime concentrate, you name it. Everyone's running 24-hour plants just to keep up."
The rush to build new infrastructure such as railways, expanded ports, factories, even office blocks in Perth, has caused an acute shortage in construction materials such as steel. To satisfy China's craving for iron ore, WA has increased its reliance on the steel China produces from it.
"We have to get some of our side-tipping trailers imported from China," Kent admits. "Our preference is to get them built here, but if we don't do it, we can't service our clients in time. Across the board, I'd say production plants all over the place are importing more and more from China."
The other critical shortage is labour, in all areas. "We're all starting to poach from each other," Harris complains. On one occasion he had to hire a taxi to drive a group of skilled welders 200km to an urgent maintenance job. "The shortage is chronic, for instrument technicians, fitters and boilermakers. As an industry we never invested in training for the long term."
Harris's son is a case in point. Less than five years ago, Michael Harris was fighting to get an apprenticeship. "No one wanted to take us on, it was hard," he says. "That's why there's a shortage now."
Boom-time wages are luring Michael's friends away from other trades. His 23-year-old mate Nick is a trained shipwright but abandoned it to work on the gas pipelines in the north. He brings home $1800 to $2000 a week after tax. "He still loves building boats but the money's got him," Michael says.
Chamber of Commerce head John Langoulant is cautiously optimistic about how long the good times will last. "There are no dark clouds on the horizon. You can't see anything getting in the way of China this side of the next Olympics in 2008." But even Langoulant wonders what sort of state economy his grandchildren will inherit. "Because at the rate of extraction at which we're depleting the resource with all this China demand, at the end of my children's life our resources will have been significantly depleted. We will be looking for other sources of income to sustain employment."
It raises the question: what legacy will be left by the China boom?
"In the 1890s, John Forrest was an imaginative enough statesman to see that gold wealth had to be used to provide infrastructure for the colony," prominent historian Geoffrey Bolton says. "He used it to put through expensive public works such as Fremantle harbour and the Goldfields water pipeline, which normally would have been a bit more than we could bite off."
In the 1960s iron ore boom, then premier Charles Court's government built a half-dozen new mining towns in the north and created the Ord River irrigation scheme, Bolton says.
"I would think a test of this state Government is to see if they do what Forrest and Court did, like getting a decent water supply for Perth," he says.
"And will we develop industries and skills where we can add value or are we going to be content to be a quarry? There's a lively sense that we ought to be doing more about value-adding, and that's the challenge for our new crop of politicians."
Harris says he favours resource wealth being reinvested in apprenticeships, hospitals and schools. "And if we solve problems like Perth's water crisis, we'll be giving our grandchildren something back."
Meanwhile, he and his son are glad to be living in a state blessed with so much of what China wants. "What did comedian Spike Milligan say about us? That we are a quarry with an oil slick around it. Luck's got a lot to do with it."
A new wave of wealth
As Western Australia is turned into a giant quarry to feed China's booming economy, Victoria Laurie and Tony Barrass investigate what the long-term benefits will beAugust 14, 2006
Affluence: Bruce Harris and son Michael are beneficiaries of WA's latest resources boom. Picture: Frances Andrijich |
TRAVELLING around the vast backblocks of Australia's biggest state, Bruce Harris is confronted by the boom that is feeding Western Australia's economy.
"If I had to show someone from outside what the boom looks like, I'd take them to see 13 empty ships line up at port at Dampier, each one bigger than the Titanic," Harris says. "I'd take them to see massive iron ore mountains in the Pilbara, shifted by endless bloody ore trains that go for miles. And I'd take them to see a pipe coming out of the sea - about the diameter of two 44-gallon drums - with about $35 million a day in gas pumping through it."A resource veteran of 30 years, Harris says he has never seen a wave of wealth like it.
Neither has anyone else. The closest would be the mad, bad 1980s when Alan Bond and Laurie Connell were guzzling Moet champagne by the crate and buying van Gogh paintings for a laugh.
But this time it's much different. This time everyone's sharing in the wealth. This time the money is coming from China, South Korea, Japan and India, not out of the pockets of elderly investors or via some dodgy corporate deal scribbled on a restaurant serviette.
This is real money and it's making a real difference to real people. While the northern towns of Karratha, Newman, Tom Price and Port Hedland are bulging at the seams servicing multi-billion-dollar projects such as the North West Shelf and massive inland iron ore operations, fly-in/fly-out work practices mean that Perth remains the funnel into which most of the money flows.
Those not on the train are jumping on quick. Many people desperate to capitalise on Perth's extraordinary property market, both office and residential, are camping out overnight in freezing conditions to make sure they are in the line to buy a block in the numerous subdivisions opening up north and south of the city. For 400sqm of flattened sand they are willing to pay up to $250,000 in instant suburbs, with names such as Success and Auburn Grove, that were roadside scrub until recently.
It's hardly surprising. Perth, once boasting the most affordable housing in the country, has leapfrogged Brisbane and Melbourne to be the second most expensive residential market behind Sydney. House prices jumped 16 per cent last year and are forecast to go above 20 per cent in the coming 12 months.
Tens of thousands of West Australians who had relatively small mortgages have become millionaires almost overnight. At the upper end of the housing market, things are looking rosy. In the past year, two of Perth's most expensive riverside mansions have been snapped up by two Chinese mining magnates for a total of $14 million. They paid cash.
"I've had my best year in 27 years of real estate," says Willie Porteous, real estate agent to the rich and husband of Lang Hancock's widow, Rose. "I've sold over $200million worth of property in 12 months and it's not to foreigners. I'm selling mostly to local people who've made money on the stock market and industry."
The trickle-down effect of extensive investment in the state's resource sector - combined with a rise in the value of mining shares - can be seen in luxury goods sales. Gucci has just opened its newest Australian store in Perth, bypassing alternative sites in Brisbane and Adelaide.
One Perth retailer of pearl jewellery says sales are up by 25 per cent, driven by middle-income buyers "who find $2000 to $5000 pieces are now easily within their reach".
Luxury boat sellers have noted a trend towards bigger boats in the $700,000 range; the downside is that available yacht pens in Perth have run out.
| BOOM BUSTS THE PROFESSIONAL EXODUS |
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Affluence is also visible in Perth's middle-class suburbs. Harris lives in a large two-storey house in Winthrop, near Fremantle. In his drive is a brand-new $30,000 Holden utility bought for cash by 22-year-old son Michael, an apprentice welder working on resource industry contracts.
Harris Sr says his workmates are moving to fast-growing satellite towns such as Mandurah, an hour's drive south of Perth, where canal estates are popular.
"My colleague is 32, he's got an $800,000 house near the water, plasma TV screens, private schools for the children, an investment property that he negatively gears," he says. "People like him are not going into hire purchase, they are paying cash."
Transport manager Ian Kent feels the benefits and the burden of the boom. His employer, Mitchell Corp, is so short of drivers it is planning to set up its own driving school. "Driving a triple road train requires a level of skill," Kent says. "And they are paid very well. Most would be earning between $80,000 to $100,000 (a year) for 10-hour days. But if you went to schools and asked: 'Who wants to be a driver?', you wouldn't get a hand up."
Seven years ago, Kent's employer was a small Perth operation carting explosives, fuel and mining supplies to the north's mineral provinces. Today it ranks as Australia's fifth largest transport company, assembling its own gigantic road trains and ore trailers.
"China has had a major impact," Kent says. "Some mines in the Pilbara are going to double in size in the next few years. They're predicting a tripling of usage of explosives, fuel, lime concentrate, you name it. Everyone's running 24-hour plants just to keep up."
The rush to build new infrastructure such as railways, expanded ports, factories, even office blocks in Perth, has caused an acute shortage in construction materials such as steel. To satisfy China's craving for iron ore, WA has increased its reliance on the steel China produces from it.
"We have to get some of our side-tipping trailers imported from China," Kent admits. "Our preference is to get them built here, but if we don't do it, we can't service our clients in time. Across the board, I'd say production plants all over the place are importing more and more from China."
The other critical shortage is labour, in all areas. "We're all starting to poach from each other," Harris complains. On one occasion he had to hire a taxi to drive a group of skilled welders 200km to an urgent maintenance job. "The shortage is chronic, for instrument technicians, fitters and boilermakers. As an industry we never invested in training for the long term."
Harris's son is a case in point. Less than five years ago, Michael Harris was fighting to get an apprenticeship. "No one wanted to take us on, it was hard," he says. "That's why there's a shortage now."
Boom-time wages are luring Michael's friends away from other trades. His 23-year-old mate Nick is a trained shipwright but abandoned it to work on the gas pipelines in the north. He brings home $1800 to $2000 a week after tax. "He still loves building boats but the money's got him," Michael says.
Chamber of Commerce head John Langoulant is cautiously optimistic about how long the good times will last. "There are no dark clouds on the horizon. You can't see anything getting in the way of China this side of the next Olympics in 2008." But even Langoulant wonders what sort of state economy his grandchildren will inherit. "Because at the rate of extraction at which we're depleting the resource with all this China demand, at the end of my children's life our resources will have been significantly depleted. We will be looking for other sources of income to sustain employment."
It raises the question: what legacy will be left by the China boom?
"In the 1890s, John Forrest was an imaginative enough statesman to see that gold wealth had to be used to provide infrastructure for the colony," prominent historian Geoffrey Bolton says. "He used it to put through expensive public works such as Fremantle harbour and the Goldfields water pipeline, which normally would have been a bit more than we could bite off."
In the 1960s iron ore boom, then premier Charles Court's government built a half-dozen new mining towns in the north and created the Ord River irrigation scheme, Bolton says.
"I would think a test of this state Government is to see if they do what Forrest and Court did, like getting a decent water supply for Perth," he says.
"And will we develop industries and skills where we can add value or are we going to be content to be a quarry? There's a lively sense that we ought to be doing more about value-adding, and that's the challenge for our new crop of politicians."
Harris says he favours resource wealth being reinvested in apprenticeships, hospitals and schools. "And if we solve problems like Perth's water crisis, we'll be giving our grandchildren something back."
Meanwhile, he and his son are glad to be living in a state blessed with so much of what China wants. "What did comedian Spike Milligan say about us? That we are a quarry with an oil slick around it. Luck's got a lot to do with it."
