As a part of a series of interviews with leading business owners in Western Australia, PERTHNOW today released their Q&A with Ralph Sarich, a property investor and orbital engine inventor.
The full PERTHNOW Q&A:
WE ASKED our most powerful and innovative business leaders about the state of the West Australian economy. Here’s what Ralph Sarich, Orbital engine inventor and property investor, had to say.
WHAT ARE YOUR THOUGHTS ABOUT THE FUTURE OF THE WA ECONOMY?
I expect that the WA economy will struggle for up to 5 years, which is more than it should, had government and business recognised the danger signs; and where they were, a degree of flippancy accompanied by financial recklessness, was practised.
DO YOU THINK MORE COULD’VE BEEN DONE TO SAFEGUARD OUR ECONOMY FROM THE COMMODITIES CRASH? IF SO, WHAT?
More should have been done to provide some insulation from a crash that was inevitable if we were to learn from numerous precedents.
A glaringly similar one was the Poseidon Era in the late sixties when the crash that occurred on the heels of a mining boom forced the industry giants and others to severely curtail spending, which created havoc for machinery dealers, construction contractors, and many related businesses. 1987 was another example.
The magnitude and duration of the recent “boom” should have set off warning bells to governments and businesses that this couldn’t be sustained forever.
Incredibly though, government committed the state to $billions of debt which it can’t repay within the foreseeable future.
This was for projects such as the stadium, Elizabeth Quay (of no value to taxpayer majority and another contributor to Perth’s growing traffic congestion problem), neither of which possessed any degree of urgency to justify the state’s plunge into a debt it can’t handle.
Indeed, Burswood’s 2012 website — “Stadium expected to increase punter patronage by 70,000 each weekend.”
Professional estimates indicate the additional patronage at Burswood Casino associated with the new stadium will add in the vicinity of $1b to the value of Crown Ltd.
There are far more important areas than this to place taxpayer funds.
IS WA PREPARED FOR A “BUST” AND DO YOU THINK ORDINARY WEST AUSTRALIANS HAVE BEEN PREPARED FOR WHAT’S COMING?
Unfortunately, ordinary West Australians, predominantly, didn’t anticipate the current predicament because they were exposed to blasé spruiking by politicians and self-serving business people which camouflaged the ominous signs.
DO YOU THINK EITHER THE WA OR THE FEDERAL GOVERNMENT COULD HAVE DONE MORE TO PROTECT US FROM THE BUST? IF SO, WHAT?
As to whether or not governments could have done more to protect Australians this is reliant upon whether or not politicians identified the signs.
Assuming they did, it would have been difficult to announce, “Gloom” as this could have triggered an earlier crash. Leaving it to “the luck of gods” was perhaps their only political choice.
DO YOU THINK WA SHOULD HAVE DONE THINGS DIFFERENTLY DURING THE BOOM? IF SO, WHAT?
WA should have “Squirreled away” a portion of the revenue it was receiving from the mining industry during the boom period, and used this to encourage alternative types of businesses to potentially reduce the effects of an inevitable bust.
IS THERE A SILVER LINING? WHAT CAN WE TAKE FROM THIS?
An astute government would be digesting what has happened now and in the past e.g., the Poseidon Era, and begin immediately focusing on the conversion of a portion of our natural resources into long term industrial and financial benefits.
A learning phase should be committed to, for the purpose of studying how non natural resource communities exploit other forms of economic survival and growth.
Intelligence will, in the long term, be a far better instrument of survival than “shipping tonnes” of ore and dirt.
WHAT COULD/SHOULD BE DONE TO PROTECT OUR ECONOMY IN THE COMING YEARS? WHAT SHOULD WE BE INVESTING IN?
Developing new products and/or superior production and manufacturing methodologies in order to create more competitive (value for money) goods.
In Monday’s Business Leader Q&A: Julian Walter, JWH Group managing director and founder and Marilyn New, former owner Esplanade Hotel in Fremantle.