So , this week WA has scored the Gas deal with China which is predicted to
"re-inflate" the WA economy producing so called "benifits" for all of Western Australia.
Now I dont know all the facts by any means or know all the politics that go on behind the scenes.

I was just thinking and am a little confused and am interested to hear from some of you who do.........

Gas prices have gone up over the last year by a reasonable ammount due to the pipeline explosion- ok, what ever.

So if China is scoring our gas for SFA should nt our (the Australian consumer) price of gas come down ? Probably not, but is it fair to export our fossil fuel for such a cheap price??

Our Iron ore is considered some of the best in the world and yep , we export the majority of it.
WA is tha fastest growing part of Australia atm but is there a Steel Mill here in West Oz? Hell no, we sell our Iron ore off interstate,overseas and then buy back the steel product for much more $$$. WHy is this , is there any sense in this happening. I actually dont know....

please explain!!!

greenleader said...

...and it's inhabitants are considered to be a bunch of backward rednecks...

No DLS and no late night trading

Its strange on the one hand Rudd-Wong and Co are going on about lowering our carbon emissions through some trading scheme to save the world and on the other hand they are facilitating the burning of billions of tonnes of gas that will release who knows how much carbon dioxide and other gasses into the atmosphere.

(flame suit on...)

WA is claiming more & more workers from interstate that are more than happy to reap the rewards of working over there "gettin' the big bucks!" At some point we are going to have to stop and have a look at what the cost of it all is.

100k+ salary for unskilled labour...140+ for skilled labour...and while the rest of the employers around the country are struggling paying 40k salaries for skilled labour in the public sector due to consumer's constraints & fierce competition...and 40k is still better than what other countries are offering!

Not only WA, locally our aluminium smelter is offering 80k+ for 'walk-in' unskilled labour (which I've been told by WA workers that they wouldn't consider working for this little!) After owning a local joinery, and paying above award to the guys I had working for me, we (me included) were on around half this amount. If I had attempted to pay them more, I would've gone bust years ago because of the competitive market.

When our resources are gone (it may be 100yrs+...it can't last forever)...so will the dollars (not that it's the issue), and ultimately, you & I will be looking back thinking "maybe the money wasn't worth it after all?" It's a bit hypocritical to be criticising what the gov't are doing with the resources in one breath, and saying "we'll take it while we can" in regard to the big salary in another!

These comments aren't aimed at the author (kearnsy), but more the general attitude to the subject 'as I see it'.

Maybe I'm wrong & uninformed

(I'll keep the flame suit on regardless)

Actually, back 50 years ago we used to have a steel works down in Kwinana. (AIS. Australian Iron and Steel) and also over east, (BHP). They eventually went out of business because it cost as much to hire somebody to shovel dirt in Australia as it costs to hire a brain surgeon in China. That is still the case.

So in answer to the original post which suggests we do all this value adding stuff in Australia, we can only do it if we sell the end product at twice the price that it costs to import it from overseas.
Others on this post have mentioned the cost of hiring skilled labour up north at 140k to 150k a year. In many cases it is higher than that when you take all the other benefits into consideration and also that this only gets you half a worker, because a lot of it is one week on/ one week off.
This makes most value adding businesses a non viable operation.
BHP finally wised up to this about 10 years ago and flogged off their steel business to Onesteel, which is now on hard times, along with Bluescope Steel. BHP is doing quite well because they specialise in digging holes in the ground.
Quite simply we have priced ouselves out of the world market in anything which is labour intensive and the only reason we do so well is that some countries have no option other that to pay us our exorbitant rates because they cant get the raw materials anywhere else. If they ever can then they surely will.
Make the most of it while you can.

pweedas said...

....BHP finally wised up to this about 10 years ago and flogged off their steel business to Onesteel, which is now on hard times, along with Bluescope Steel. BHP is doing quite well because they specialise in digging holes in the ground.
Quite simply we have priced ouselves out of the world market in anything which is labour intensive and the only reason we do so well is that some countries have no option other that to pay us our exorbitant rates because they cant get the raw materials anywhere else. If they ever can then they surely will.
Make the most of it while you can.

Pweedas, your comments are right in that this is supply/demand at work and BHP are ruthless in pursuing their corporate strategy.
However, value adding is possible in Australia.... BHP recently sold Yabulu Refinery (because it did not fit their 'dig n deliver' strategy, NOT because it's not able to make a profit).
What does Yabulu Refinery do?
Put simply, it IMPORTS ore from various overseas countries, refines the ore to world class nickel & cobalt products, then EXPORTS these products at premium prices.

Yes, the high labour cost in Oz makes it difficult to compete in many value adding markets, however it is possible in the right circumstances.