Despite their confidence in the strength of the Western Australian economy, WA chief executives are seriously concerned about the impact of the current regulatory environment, bureaucracy and poor planning on the state's future economic growth.
Despite their confidence in the strength of the Western Australian economy, WA chief executives are seriously concerned about the impact of the current regulatory environment, bureaucracy and poor planning on the state's future economic growth.
Accounting firm Ernst & Young interviewed the CEOs of 31 of WA's fastest growing Top 100 ASX listed companies over the past 12 months during which leaders from across the resources and industrial sectors highlighted the potential challenges to sustaining growth at the levels currently forecast for 2008.
Ernst & Young partner, Peter McIver, who conducted the interviews, said that the WA CEO's he spoke to expect WA to sustain a strong economy in 2008, albeit highly leveraged to the resource sector and, in particular, exposed to China.
Among the concerns shared were the extent of state regulation and red tape, local infrastructure not keeping pace with local economic growth, skills and equipment shortages, and the global economic dampening effect of the US sub-prime meltdown.
Few had any concerns over the effect of the recent change in federal government.
"Their view is that, with China experiencing sustained long-term growth, and India emerging as an economic force, WA remains well placed to supply the long term commodity demands of those rapidly growing economies," he says.
"The flow on effect to local service companies remains strong."
Mr McIver said there was a growing consensus that WA has been 'lucky' in spite of a lack of regulatory and government stimulus and CEO's hope the government will 'take off the breaks'.
"These business leaders believe the regulatory environment, bureaucracy and poor planning has and will continue to dampen the state's potential. In 2008, the government must continue to use the prosperity of the state to fund its much needed infrastructure program and work to reduce bureaucratic barriers to growth."
An equally strong concern of the CEO's, Mr McIver said, was that Australian talent was critically thin on the ground, and the shortage of both blue and white collar workers would continue to impact the cost structure of WA business projects and affect the returns of WA companies.
"In addressing the widespread talent shortage, many of the CEO's interviewed are either using or considering global resourcing. Many are sourcing human capital from the world market, while some are expanding their workforces by opening Asian technical centres, and others are looking at more traditional outsourcing arrangements," he said.
Mr McIver believed this global approach was both the answer to WA's human capital crisis and an important driver of growth.
The WA CEO's interviewed also believe there may continue to be some further fallout from the lending issues in the US, with the potential for this to create a softer equity market than that occurring in early 2008, with significant market volatility.
Certainly, many of the CEO's are reducing risk by diversifying funding across global markets including the New York, Toronto, London and other European and African stock exchanges.
"If this type of outward-looking strategy becomes the norm in WA, and with the political insight to cut through bureaucracy, and if CEO's stick to their long term goals and growth plans there seems no reason why WA shouldn't achieve strong forecast growth in 2008," Mr McIver concluded.
