Despite media misinformation, Western Australia remains national growth leader: Terry Ryder

Somewhere deep in the ethics-free zone that is newspaper reporting they’ve come up with the wackiest notion yet: Western Australia is in recession.

It’s nothing of the sort, but in print media few give a damn.

Here’s how it works in metropolitan newspapers. Someone with a public profile makes a speech. A reporter lifts a single sentence from the speech, takes it out of context, puts an outrageous spin on it and turns it into the screaming negative that will make tomorrow’s front page lead. Other newspapers will pick up the story and repeat it as fact. Within 24 hours it has become an undeniable truth, repeated as such around the nation.

That’s how the notion of a real estate bubble got started in Australian several years ago. Reserve Bank governor Glenn Stevens made a speech. A Sydney journalist reported that Stevens said he was concerned about a real estate bubble. Most major outlets around the country picked up the story and repeated it as fact. It has been regarded as truth even since.

But Stevens never said it, nor anything remotely like it. It was more than a beat-up – it was a fabrication. I read a transcript of the speech and listened to an audio of the speech and the question-and-answer session that followed. The word “bubble” was never used. Nothing was said that could be construed as concern that Australian property prices were inflated. The RBA issued several media releases to correct the public record, but no one was interested.  

Last week something similar happened. Saul Eslake, a candidate for the national title of economic forecaster who gets it wrong most often, said this: “In WA it’s probably too early to say it is in recession but given the way unemployment is increasing it is very close.”  

Eslake’s rather startling leap from an alleged rise in jobless numbers to being on the brink of recession was based on erroneous numbers. He said WA’s jobless rate in April was 5.2% - but the ABS records a jobless rate of 4.9% in WA, well below the national average of 5.5%.  

Since when has a rise in unemployment been the marker for recession, anyway – but, no matter, the West Australian newspaper declared that the state already was in recession and it quickly became a national story. A fiddling of State Final Demand figures to create a negative impression added further to the beat-up.  

I’ve examined a range of economic indicators and they all show WA is the polar opposite of a state in recession. Out of nine indicators, it leads the nation on four, is second on another and third on the other four.  

Its population growth rate is 3.3%, well ahead of the 1.6% national average and easily the highest in the nation. Retail spending has risen 7.9% in annual terms, compared to the 3.1% national average and again the highest growth in the nation. Finance to home-buyers is up 10.8%, compared to just 1.6% nationally, and yet again No.1 among the state and territories.  

WA also leads in annual growth in gross state product, while annual growth in state final demand is a tick under 10%, three times the national average and second highest in the land.  

Building approvals are up 16.6%, double the national average, and growth in dwelling commencements is the third highest in Australia. There has been a 12.7% rise in loans to property investors, almost double the national average.

In Perth, residential rents have risen 20%-plus and prices are starting to follow, as increasing numbers of buyers compete for homes, some offering well above the asking price to beat off competitors.  

If this is recession, Australia is deep the toilet and the world is buggered.  

The federal Treasury was sufficiently disturbed by the bizarre media headlines to label the reports “hysteria”. Treasury chief economist David Gruen told a Senate hearing last week: “The idea that, in the face of the largest export boom we have ever seen, you ignore exports and focus on the price of the economy which is demand in WA and claim that that’s a recession, it belongs in the comic books, not in serious newspapers.

“We are in the midst of the biggest mining boom we have ever seen, a significant share of that is in WA - and they are exporting volumes of iron ore and increasingly liquefied natural gas at rates we have not seen before in our lifetimes.  

“Recessions have never been assessed on the basis of demand, they are assessed on the basis of output.”  

I’ve filed notions of a recession in WA in the same waste paper basket as claims that the resources boom is over. WA continues to be the national growth leader, challenged only by the Northern Territory, and Perth continues to have the nation’s second hottest city real estate market, bettered only by Darwin.  

Terry Ryder is the founder of hotspotting.com.au