Main Content
Economic Environment
This section details the economic environment of Perth city and the reasons why it is an attractive centre for world wide business.
Please click on any of the following topic headings to view more detailed information about that topic on this webpage.
Economic overview | Workforce and Resident profile | The Evolving City | The Office Market
Globally connected | Efficient infrastructure (Sea, Road and Air) | Free WiFi in 'Resources Sector'
Business Structures in Australia | Banking and Finance in Australia | Australia’s legal system | Political system | Taxation
The Economy
ECONOMIC OVERVIEW
The exceptional growth of the West Australian economy in recent years been driven by a thriving resource sector that has to some extent insulated the WA economy from some of the more dramatic impacts seen across the world during the financial crisis.
Continued demand for minerals and energy commodities from Asia, predominantly China, along with several advanced projects currently under construction or under consideration and a lower Australian dollar have maintained favourable trade conditions while insulating the economy against commodity and other major price fluctuations.
The global financial crisis has resulted in uncertainty and business challenges in traditionally strong operating environments. However, the Western Australian economy appears to be better placed to survive the impacts, continuing to play a major role in the Australian economy, with local business confidence across key sectors remaining positive .
The Sensis Business Index for February 2009 indicated Western Australia had recorded the strongest rise in business confidence among Small to Medium Enterprises (SME) in the previous quarter of any state or territory in Australia.
Forecast
Despite some slowing in both Western Australia’s growth (Gross State Product), the WA economy is expected to outperform the worldwide economic growth forecast for 2009, which is expected to fall well below the 3% benchmark normally used to indicate global recession.
The West Australian economy is forecast to contract by 1% during 2009-10. This is the lowest growth rate recorded in the state over the last decade.
In trends terms the annual growth rate is declining, although the above growth rates still positions West Australia as one of Australia's top performing states.
Snapshot (as at February 2009)
• The effect of falling commodity prices on Western Australia’s export market has been softened by favourable exchange rates since August 2008.
• The slowing of the West Australian housing market has begun to stabilise after years of intense activity.
• Housing affordability has noticeably improved with a reduction in housing cost and interest rate cuts.
• An increase in the completion of new dwellings has resulted in a steady flow of properties into the Perth rental market.
• Consumer spending and confidence has fallen sharply in recent months.
• A period of lower consumption is expected due to declines in household wealth and increases in housing debt.
• Government efforts to stimulate economic activity will assist in calming the effects of lower consumer spending and confidence.
• Western Australia’s cash rate was cut by 3% to 4.25%, which provided relief but is higher compared to other developed economies.
• In contrast Western Australian’s employment growth increased, with an annual growth rate of 4% and unemployment reaching a 34-year low of 2.3% at the end of 2008.
• Indicators are showing that employment growth in 2009 is expected to weaken.
• Business investment has been a major driver of Western Australia’s economy in recent years. Business investment continues to be strong in the ending quarter of 2008.
• In the short term business development in the state is likely to remain strong. Large projects such as the $12 billion Pluto gas development, are currently underway or committed. The closure of mining operations such as BHP Billiton’s Ravensthorpe nickel mine will moderate the strength of business development.
• Business investment is forecast to fall in 2009-10 unless new major commence following the completion of those currently under construction.
• Western Australia’s export values in 2008 rose strongly, mainly reflecting increases in export prices. Recent decreases in commodity prices are yet to be reflected.
• Global and national economic comparison shows that the Western Australia economy is faring better than most during this time of economic uncertainty.
• The full effects of the global economic turndown on the state’s economic growth are not expected to be witnessed until 2009-10.
For detailed information on the economy of Western Australia visit the Department of Treasury and Finance www.dtf.wa.gov.au. The economic summaries are available under the Treasury tab.
WORKFORCE AND RESIDENT PROFILE
The City of Perth’s Population
One any given day the City of Perth has the highest concentration of people than anywhere else in the state. These include residents, workers, tourists, shoppers, students and other doing business in the city.
The workforce
The City of Perth offers a workforce of just fewer than 110,000, with an additional workforce of 511,999 spread across the remainder of the metropolitan area.
|
The City of Perth Workforce |
||
|
|
City of Perth |
Metropolitan area (remainder) |
|
Year |
Workforce |
Workforce |
|
2006 |
109,690 |
577,999 |
|
2001 |
98,353 |
448,548 |
|
1996 |
96,361 |
Comparable data not available |
|
1991 |
87,689 |
Comparable data not available |
|
Source: Australian Bureau of Statistics |
||
The City of Perth workforce characteristics:-
• The City workforce has a relatively even gender split with 13.8% of the male workforce being aged 35-39 years with 15% of the female workforce aged between 25 and 29 years.
• Those that own a business within the City comprise 6% of the workforce.
• The top three industries employing almost half of the workforce are the Professional, Scientific and Technical Services (19.1%), followed by Public Administration and Safety (15.9%) and Financial and Insurance Services (11.6%). Just over 7% of the workforce was employed in the Mining industry sector.
• Following standard full time working hours 43.3% of the workforce work 35-40 hours a week with 32% working in excess of 41 hours per week and interestingly of this 28% are employee’s not business owners.
• There is a direct correlation with the number of hours worked and weekly gross individual income, with 67% of those earning over $2,000 gross per week working in excess of 41 hours.
• City workers are more likely to be professionals (35.2%%), clerical and administration workers (26.8%) and Managers (13.4%).
• Income levels in the City are high as would be expected of a highly educated workforce, with just fewer than 50% earning over $600 per week.
• Workers grossing $2,000 or more per week comprise 15.8% of the workforce with a great proportion of these workers being managers or professionals and are aged in their mid 30’s to 55 years.
• A large proportion (62%) of the City workforce has continued study beyond compulsory schooling with the majority of these workers (30.3%) holding a bachelor degree.
- The majority of workers (97.5%) live outside of the city with a high percentage living within 15km from the City.
- The percentage of workforce that live and work within the city is 2.5%.
- A quarter of the City workforce is in the 30 – 39 year age brackets.
- The city has a relatively even gender distribution (50.3% male and 46.7% female).
The Residents
In 2006, there were 15, 763 people residing in the City of Perth, while another 2,906 visitors temporarily resided in the City on census night.
The next national census is due to take place in 2011.
Like many Australian inner city areas, the City of Perth has experienced a significant increase in population growing from 8,652 over the ten years to 2006, representing a growth rate of 11%.
|
City of Perth Historical Resident Population |
|
|
2006 |
15,763 |
|
2001 |
11,227 |
|
1996 |
8,652 |
|
1991 |
8,215 |
City of Perth Resident characteristics:-
• The City of Perth age structure is reflective of inner city trends across Australia with a low proportion of residents aged less than 10 years and a high proportion of adults.
• Those aged between 25 and 49 continue to make up the greatest proportion of the City’s resident population at 44.6%.
• Overseas born comprise 37.3% of the population and 24% are from non-English speaking backgrounds.
• The dominant non-English speaking country of birth was Malaysia, comprising 2.9% of the population.
• Overall, 37.5% of the overseas born population arrived before 1991, and 39.9% arrived during or after 2001.
|
TOP 5 Countries of birth of City Residents, 2006 |
||
|
Country |
Number of persons |
Percentage of total population |
|
United Kingdom |
1,325 |
8.4% |
|
Malaysia |
456 |
2.9% |
|
New Zealand |
337 |
2.1% |
|
Singapore |
330 |
2.1% |
|
Indonesia |
290 |
1.8% |
• Overall, 39% of City of Perth residents earn more than $1,000 per week.
• Like the City of Sydney and Melbourne the City of Perth has a high proportion of residents earning $1,000 per week or more. The proportion of those earning less than $400 per week in the City is low, this is similar to Sydney but distinctly different from the City of Melbourne.
• Like most capital city area the City of Perth residents are highly educated with more than 44% of City residents holding formal qualifications with 26.9% of this group holding a bachelor or higher degree.
• 15% of the population is currently enrolled in tertiary studies.
• Less than 5% of the locality's labour force was unemployed, with 68.1% of the labour force employed full time and 26.1% in part-time employment.
• A significant proportion (17.1%) of residents are employed in the Professional, Scientific and Technical Services industry. Following this the top three industry categories are; Health Care and Social Assistance (8.0%), Accommodation and Food Services (7.9%) and Retail Trade (6.8%).
• Most residents hold Professional (33.9%), Managerial (20.3%) or Clerical and Administration (15%) positions.
• Most City households comprise of one person (46.9%), with the most common family type being couples without children (66.2%).
• City residents are more likely to be renting (44.3%) compared to 13% of residents owing their property and 16.5% currently purchasing.
• Just over 20% of those residents purchasing have a monthly housing loan repayment of $2,000 to $2,999 per month. While renting is costing $225 to $449 per week for 44.2% of the rental population.
For more detailed demographic information on City of Perth residents and the workforce visit www.perth.wa.gov.au/web/Business/
The Evolving City: An Atlas of Change in the City of Perth 1990 -2007 is the fourth publication in a series tracking change in the central city through the land use, employment and floor space survey. Please visit www.planning.wa.gov.au/Plans+and+policies/Publications/276.aspx
In 2008 Western Australia became on of the top 50 most expensive office markets in the world according to CB Richard Ellis’ Global Market Rents Survey. Perth ranked 41, slightly behind Sydney at 38 and in front of Brisbane ranked 46. London’s West End tops the list.
The Perth office market in 2009 is adjusting in response to the tight market of previous years and the Global Economic Crisis; however these changes are presenting various opportunities for investors and new and old tenants.
The Perth (CBD) office market still remains the tightest in Australia, although the office market vacancy rates are increasing, and accommodation cost and incentives are more competitive.
The Perth (CBD) vacancy levels increased from an all-time record low of 0.3% in July 2008 to 1.3% in January 2009. This is significantly below the national average CBD vacancy rate of 5%.
Perth’s, other major office market, West Perth has gone from a 0% vacancy in 2008 to 1.9% in 2009.
The demand for office space from the mining and government sector, along with the closure of several smaller mining companies has provided office space opportunities, especially in the West Perth area. Interestingly, the larger mining companies are not reducing their office space requirements.
It is predicted that the next 12 months will provide significant opportunities for tenants looking to enter the CBD and for large companies already in the City which wish to expand their operations following years of restrictions due to a lack of available space.
In 2009-10, around 309,770sq meters of office space is forecast to enter the CBD. 73% of this space is pre-committed. In early 2009 the first 5 star Green building – 235 St Gerorges Terrace will enter the market. This building is fully leased.
Other office space entering the market includes:-
• Century City
• Alluvion
• 140 William Street
• City Square
• Raine Square
Perth CBD Office Market, January 2009
|
Grade |
Vacancy (%) |
Vacancy (%) |
Net absorption |
Net absorption |
|
Premium |
0.0 |
0.0 |
0 |
0 |
|
A |
1.5 |
0.3 |
4,744 |
3,638 |
|
B |
1.0 |
0.7 |
-7,198 |
-611 |
|
C |
3.0 |
0.0 |
-5,897 |
-2,646 |
|
D |
0.0 |
0.0 |
0 |
0 |
|
TOTAL |
1.3 |
0.3 |
-8,351 |
381 |
|
Source: Property Council of Australia |
||||
West Perth Office Market, January 2009
|
Grade |
Vacancy (%) |
Vacancy (%) |
Net absorption |
Net absorption |
|
A |
1.2 |
0.0 |
2,641 |
2,641 |
|
B |
2.5 |
0.0 |
-1,864 |
-1,864 |
|
C |
2.2 |
0.0 |
-2,959 |
-2,959 |
|
D |
0.0 |
0.0 |
-830 |
-729 |
|
TOTAL |
1.9 |
0.0 |
-3,012 |
-2,908 |
|
Source: Property Council of Australia |
||||
Global Gateway
Western Australia is well placed for global business and to the world’s new and emerging markets. Perth is located close to the Asia Pacific Rim and the Indian Ocean Region and is the gateway to Australia’s east coast with many of the world top markets only a few hours flying distance from Perth.
Major Asian markets – like Seoul, Bangkok, Hong Kong, Singapore and Jakarta share the same Business Time Zone with Western Australia, which means business communication can be conducted during normal working hours.
Unique amongst Australian cities, Western Australia is able to contact Europe during the latter part of the business hours.
Western Australia – International Business Liaison Schedule
(WA Standard time)
Western Australia is an export-oriented destination which offers modern, highly efficient and continually expanding infrastructure with equally impressive support services. The State provides all the business infrastructure and support services required to cost-effectively operate any type of competitive international business.
Sea
Being the nation’s largest export State, Western Australia offers eight ports and other maritime facilities along the 12,500 kilometer coastline. West Australian ports handle 4,000 international trading vessels, plus thousands of interstate, intrastate, fishing and recreational vessels.
The Fremantle Port is the states main cargo and container port. It operates from two locations, the inner port located in Fremantle and the outer port in Kwinana. The Fremantle Ports handle 83% by value of Western Australians seaborne imports and 25% of the seaborne exports.
The Pilbara ports of Dampier, Port Headland and Cape Lambert are world leaders in the minerals and gas exports.
Bunbury, Esperance and Geraldton handle mineral exports along with grain and manufactured exports such as Alumina. Albany is predominantly grain with mineral and woodchip shipment being considered.
Road
Western Australia has a vast, well designed transport network providing good access to major fright terminals and depots, which is critical to efficiently shift the millions of tones of freight that move through the Perth metropolitan area. The highly competitive private road haulage sector handles more than 170 million tones of freight annually.
The State’s extensive land transport network includes more that 17,000 kilometres of toll-free road.
Air
Perth Airport is Western Australia’s principal international, domestic and regional gateway for commercial aircraft and freight.
It’s one of Australia’s closest major airports to South East Asia, Europe and Africa.
There are around 100 weekly flights linking Perth and Asian destinations. The international and national airports are just a 10 min drive from the city centre.
| Distances and flying times (approximate) | ||
| Perth to: | ||
| International | ||
| Singapore | 3,900km | 4hrs 40min |
| Seoul | 8,600km | 11hrs |
| Hong Kong | 6,000km | 7hrs 30min |
| Bangkok | 5,350km | 6hrs 30min |
| Shanghai | 7,000km | 8hrs |
| India | 6,260km | 7hrs |
| Tokyo | 7,900km | 9hrs 50min |
| London | 14,000km | 17hrs 30min |
| Dubai | 9,020km | 10hrs and 50min |
| Los Angeles | 16,000km | 16hrs 30min |
| New York | 19,500km | 19hrs 20mins |
FREE WIFI NETWORK IN PERTH 'RESOURCE QUARTER'
Free Wi-Fi coverage extends along St Georges Terrace west from William Street to the Barracks Arch near Parliament House, and from Murray Street, south to Mounts Bay Road. This area is often referred to as the Resources Quarter.
Free to everyone, ResourcesNET lets you send and receive email, browse the web, download information, enjoy video and webcam, perform personal transactions, publish information, and engage in voice communications, using standard wireless devices such as computer laptops and personal digital assistants.
ResourcesNET is generally available 24 hours per day, seven days a week, within the Perth Resources Quarter area. So, whether you are passing through the Perth Resources Quarter, are an overseas visitor, shopper, or in town for business or pleasure, you can connect to the Internet without any cost to you, at any time, day or night.
ResourcesNET is funded by the resources industry of Western Australia through the Chamber of Minerals and Energy of Western Australia Incorporated, and the Australian Petroleum Production and Exploration Association Ltd, as support for making Perth a more attractive, creative and inspiring city in which to live, work and recreate.
http://www.cmewa.com.au/wifi/
Doing Business in Western Australia
BUSINESS STRUCTURES IN AUSTRALIA
- Banking and Finance in Australia
- Australia’s legal system
- Political system
- Taxation
It is recommended that you seek legal or other professional advice to determine the most appropriate business structure to suit your particular circumstances.
Below are the four principle forms of business organizations in Western Australia:-
Company
A company or corporation (the words have the same meaning) is a legal entity that is separate from its members. A foreign company may establish a branch in Western Australia by registering as a foreign company. Publicly listed companies are required to report on their performance and financial position on an annual basis. The Australian Securities and Investment Commission’s (ASIC) may request additional information at its discretion.
Partnership
A partnership is an association of people who carry on a business as partners or receive income jointly.
Sole Proprietorship/Sole Trader
A sole trader is the simplest business structure and consists of an individual trading on their own. That person controls and manages the business.
Trusts
A trust is an obligation imposed on a person to hold property or income for the benefit of others (who are known as beneficiaries).
Other business structures include:-
- Joint ventures
- Franchises
- Cooperatives
For more information on business structures visit:-
- Department for Commerce (www.commerce.wa.gov.au)
- Government Business website (www.business.gov.au)
- Securities and Investment Commission (www.asic.gov.au)
For detailed information and a guide to starting a business visit:
- The Australian Government Business website (www.business.gov.au)
- Australian Securities and Investment Commission (www.asic.gov.au)
- The Australian Taxation Office (www.ato.wa.gov.au)
BANKING AND FINANCE
Australia has a well established and sophisticated banking and financial system and is ranked as one of the world’s most mature and efficient. The Reserve Bank of Australia (www.rba.gov.au) is the main regulatory body.
In light of current global economic conditions, Australia’s top four banks now rate in the top 14 in the world, maintaining AA credit ratings and remaining highly competitive in comparison to their global peers.
The stability and security of Australian banks has resulted in additional attention from global investors, particularly those based in the US, and the ‘big four’ expect there will be increased equity participation from foreign institutional investors.
All major Australian banks maintain branches in Western Australia.
Many international banks have setup in Western Australia to take advantage of the high growth and investment opportunities in the Australia and Asia-pacific region. These international banks operate as branches, allowing a wider range of finance sources for investors.
Australian banks offer foreign investors the same access to products and services as local investors.
Financial Market
Australia’s financial market ranks amongst the world’s best, with deep and liquid trading, markets in equities, foreign exchange, futures, swaps, options and a wide range of derivative products.
Foreign Exchange Rate
Australia exchange rate policy has been ranked first in the world by the IMD World Competitiveness Year Book , ranked 8th in the world by turnover and is the 7th most actively traded currency.
Specialised Financial and Investment Institutions
In addition to banks, Western Australia offers a wide variety of financial and investment institutions that foreign investors can access. These include:-
Building Societies
Cooperative not-for-profit institutions with the primary role of providing mortgage financing for owner-occupier housing, savings and personal loans.Corporate Lending Institutions
Commercial organisations providing access to private equity and commercial finance for project start-ups and expansions, including infrastructure and equipment finance, commercial lending solutions and mezzanine finance.Credit Unions
Mutual not-for-profit institutions that service the borrowing and lending needs of members.Finance companies
Providers of short to medium term financing for households and small business including installment credit for retail sales, personal loans, housing finance, wholesale finance, factoring, lease financing and commercial and property development loans.Insurance Offices
Providers of a range of life and general insurance cover for individuals and businesses.Export Finance and Insurance Corporation (EFIC)
A Statutory corporation owned by the Commonwealth Government of Australia. The EFIC offers exporters insurance against non-payment by overseas buyers,
The legal system in Australia had developed from British Law. It is distinct from the civil law systems that operate in Europe, South America and Japan, which are derived from Roman law. Other countries that employ variations of the common law system are the United States, Canada, New Zealand, Malaysia and India.
Fast Facts on Australia’s Legal System:
- Australia is characterized by two sources of law:-
1) Legislation enacted by Federal, State and Territories Governments
2) Common law. - Law is administered under Federal and State jurisdiction and both systems incorporate the three branches of government – legislative, executive and judicial.
- Laws are made by the federal and state parliaments, while an independent judiciary interprets and applies them.
- Each State has its own judicial systems and hierarchy of courts headed by the Supreme Court.
- The High Court of Australia is the final court of appeal in respect to all matters.
- All people – Australian and non-Australian alike – are treated equally before the law.
- In all cases, defendants are considered to be innocent until proven guilty beyond all reasonable doubt.
- Legal representation will be provided to those who can not afford representation, based on a means test.
For a detailed fact sheet on the Australian Legal system please visit the Department of Foreign Affairs and Trade (www.dfat.gov.au/facts/legal_system.pdf)
Other sites of interest include:-
- Australian Governments Attorney Generals Office (www.ag.gov.au)
- Department of Attorney General WA (www.justice.wa.gov.au)
- IP Australia (www.ipaustralia.gov.au)
The Commonwealth of Australian was formed on 1 January, 1901 when 6 former British Colonies – now six states – Western Australia, South Australia, Victoria, Tasmania, New South Wales and Queensland and two territories – Australian Capital Territory and the Northern Territory, agreed to form a union. The Australian Constitution, which lays down the framework for the Australian system of government, also took effect on this day.
The Australian Constitution has three branches:
- Legislative – contains the parliament, the body with the legislative power to make laws.
- Executive – administers of the law
- Judical – allows for the establishment of the Country’s courts of law and the appointment and removal of it’s judges.
The Australian constitution sets out the responsibility of the government including areas of national importance such as taxation, defence, foreign affairs and immigration.
Commonwealth Parliament
The Commonwealth of Australia uses the Westminster system of government. The official Head of State is Queen Elizabeth II, represented in Australia by the Governor-General, Ms Quentin Bryce AC. The Governor-General is appointed by the Queen on advice of the Prime Minister of Australia.
The current Prime Minister of Australia is Kevin Rudd of the Australian Labour Party. In opposition is the leader of the Liberal Party.
Australia is a representative democracy. Voting in Australia is compulsory for citizens over the age of 18. The next election can occur within three years of the first sitting of the new Parliament, at a date selected by the incumbent government. The last election was held in 2007.
State and Territory Government
The state and territory government are responsible for the powers not administered by the commonwealth government.
Each state and territory has its own parliament and its own constitution (which can be amended by its parliament), but they are bound by the national constitution.
The state and territories are responsible for matters which include: public health, education, roads, public land use, police, fire, ambulance services and local government within their State or Territory.
Local Government
Local governments are established by state and territory governments to take responsibility for a number of community services. Local government have a legislature and an executive, but no judiciary. Their powers are defined by the state or territory government which established them. Local governments are also known as local councils.
TAXATION
Businesses in Australia are subject to tax laws imposed by local, state and federal governments. The Australian Taxation Office and your Taxation Consultant will provide you with all the information you require.
There are many forms of tax that you should be aware of, with income taxation being one of the most important. It is a federal tax imposed on individuals and businesses.
Global comparisons of taxation rates shows Australia’s maximum tax rate of 30% calculated on profits for both resident and non-resident companies is the same as the United Kingdom and better than New Zealand (33%), India (34%) and the USA (35%).
To ensure foreign companies are not taxed twice, Australia has a double tax agreement. Such agreements are in place with a variety of countries with the purpose of avoiding taxation of income twice. To view the full list of countries participating in the Double Tax Agreement, please visit the Australian Tax Office website.
The Australian taxation system offers a series of tax concessions, offsets and incentives to help business and industries proposer. Contact the Australian Taxation Office and or your Taxation Consultant for more information and details.
|
Common Business Deductions
|
||
| Advertising | Cost of fringe benefits | Register tax agent fees |
| Bank fees and charges | Hire and lease of plant equipment | Rent of lease on business premises |
| Business travel (away from home) |
Home office expenses | Super contribution for employees |
| Decline in the value of depreciating assets | Interest on borrowed money | Trading stock |
| Electricity | Motor vehicle expenses | Transport and freight |
| Employee Wages | Phone expenses | Others – consult your tax advisor or the Australian Taxation Office |
Australia’s legal system is robust and well regarded for its fair administration being ranked 7th in the world and 3rd in the Asia Pacific region in the 2008 World Competitiveness Yearbook. The Australian government policy-making process is internationally recognised for its transparency, with bribery and corruption being rare.
Australia has a three tired political system consisting of Federal (Commonwealth), State and Local Governments.
