Modelling of the economic effects of the domestic gas supply disruption, caused by the explosion at Varanus Island last month, has been carried out by the Department of Treasury and Finance.
Treasurer Eric Ripper said the disruption was estimated by Treasury to reduce Western Australia’s economic growth by 0.5 percentage points to 7.0 per cent in 2007-08.
However, Mr Ripper highlighted that the impact of the disruption, caused by the explosion at Apache
Energy’s Varanus Island gas-processing plant on June 3, was expected to be temporary.
He said growth in the State’s economy in 2008‑09 was expected to be back on track, forecast at 6.25 per cent, as shown in the Budget which was determined before the disruption.
“Despite this initial reduction in growth, WA’s economy is still expected to be the fastest growing State in 2007‑08 and 2008‑09, and remains on track to record its third consecutive year of growth above six per cent,” the Treasurer said.
“For 2007-08, employment growth is reduced by 0.7 percentage points, and export growth by 1.3 percentage points, while the investment growth rate remains the same.”
Mr Ripper said the modelling showed that although the growth rates for most industries had slowed, it still indicated an upward trend for these industries in 2007-08.
The most affected exports were energy intensive sectors such as chemicals, metal products, textiles, clothing, footwear and rubber and plastic products.
Gas-fired electricity stood out as the single most affected industry in terms of output and there were also flow-on effects to the non-resource economy.
“In the long term, the disruption is estimated to reduce WA’s economic value by $1.8billion between 2007‑08 and 2011-12,” the Treasurer said.
“But this $1.8billion figure (estimated at 2008-09 values), only equates to 0.2 per cent of the economy over the same five-year period.
“While there is no doubt that the incident at Varanus has caused significant disruptions to particular firms, the overall health of the economy is expected to come through this disruption well,” he said.
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