Bankwest Curtin Economics Centre warns Western Australia needs mining reform to continue growing

In its 'Western Australia's Resources Sector in Transition' report, Bankwest says the Western Australian mining sector contributes $200-billion each year to the country's economy, driving jobs, exports and government revenue.

However, Bankwest warns that the conditions that have delivered decades of prosperity are rapidly shifting, with decarbonisation, technological change and intensifying global competition reshaping resource markets. "The next phase of growth will be driven by value, not volume," Bankwest states.

Co-author of the report and Bankwest director Professor Alan Duncan says Western Australia is entering a pivotal period and without a deliberate shift towards higher-value industries, processing and innovation, it risks being outpaced.

For decades Western Australia's prosperity has been built on extracting and exporting resources, Duncan explains, which is a model that has served the region well, but the next chapter will look different. "The big question is not whether we have the resources, it is whether we can create more jobs, more industries and more long-term value from them before they leave our shores."

Bankwest also finds that iron-ore remains a cornerstone of the Western Australian economy, generating about $126-billion in economic output and accounting for more than 80% of Western Australia's royalty revenue - but this will decline over time.

At the same time, demand for critical minerals needed for batteries, electric vehicles and other emerging renewable-energy technologies is expected to grow strongly over coming decades.

Western Australia now has a rare opportunity to build on its existing strengths if it acts now, adds co-author of the report Dr Silvia Salazar.

"Under future scenarios modelled in the report, critical minerals, processing and other value-added industries could generate more than $100-billion a year by 2050 – a fivefold increase from around $20-billion today," she explains.

This while fossil fuel exports decline from around $39-billion in 2025 to about $11-billion by 2050 under the accelerated scenario.

“We have the minerals, the expertise and the global reputation to be a leader in the industries emerging from the global energy transition,” Salazar says, adding that success is not guaranteed.

“Other countries are competing hard for the same opportunities, and if we want to capture a larger share of global demand we will need the right energy, infrastructure, skills and investment settings in place.”

Mining and petroleum royalties delivered almost $10-billion to the Western Australia government last year, around one-fifth of total State revenue.

Duncan emphasises that level of reliance highlights the need for coordinated action across government, industry and the community to capture the full benefits of the transition and secure long-term prosperity for future generations.

“Western Australia earned almost $10-billion last year from finite resources and that prompts an important question: what are we leaving behind for future generations?” he asks.

LIQUEFIED NATURAL GAS

The Bankwest report further examines a range of alternative fiscal settings, including royalty reform, changes to resource taxation arrangements and a hypothetical public equity stake in a major liquefied natural gas (LNG) development.

The modelling finds that relatively modest changes to fiscal settings can generate billions of dollars in additional public revenues.

For example, the approval of the Browse LNG project could generate tens of billions of dollars in additional state and Commonwealth revenues between now and 2050, while alternative royalty structures can materially alter the timing and distribution of those returns.

The report also finds that a hypothetical 30% public equity stake in a new $50-billion LNG project could create a long-term revenue stream extending well beyond the productive life of the resource if returns were invested through a future fund model.

"One of the key lessons from the report is that policy settings matter.

"The difference between one fiscal arrangement and another can amount to billions of dollars over the life of a project.

“The challenge is making sure today's mining wealth becomes tomorrow's industries, jobs and fiscal value. “Every tonne we extract should help build a stronger future for Western Australia," Duncan says.

The report outlines a series of policy priorities to support a successful transition, including moving further up the value chain, investing in enabling infrastructure, strengthening innovation and productivity and building globally competitive industries linked to the energy transition.