Weak wages, private school flight belie economic success Down Under
Western Australia mining boom hit by weak market
SYDNEY (Reuters) – Parents in Western Australia’s most expensive suburbs are pulling their children out of pricey private schools and enrolling them in the state-funded system.
Others are abandoning WA altogether as wages tumble and jobs disappear in what was the center of a once-in-a-generation mining boom that pushed Australia high up global growth charts.
But as the downturn in WA illustrates: Strong iron ore and LNG exports that underpin impressive headline growth figures are of little comfort to most Australians suffering stagnant pay.
WA is Australia’s dominant iron ore state, and home to Port Hedland, the world’s largest bulk commodity port. Hundreds of exploration, miners and mining services companies are headquartered in Perth, the state capital.
And waning demand for private schools in Perth reflects the state’s difficult transition from being the nation’s jobs creation capital to economic laggard.
State-run school enrollments in WA have grown at a faster rate than private schools for the past five years, reversing a long-term trend away from public education in the mineral-rich state.
This change is particularly evident in Perth’s upmarket western suburbs, according to the state government, where house prices have been hit.
“Undoubtedly private schools are no longer the price-makers they were a few years ago,” said businessman John Poynton, who is the council chair of the exclusive Christ Church Grammar School and co-founder of Perth-based advisory firm Azure Capital.
“There’s obviously been some movement to the government sector but there’s also been families leaving Perth altogether.”
Christ Church charges annual tuition fees of A$26,200 ($18,950), plus an enrollment fee of A$6,550, for a high school student; and almost A$50,000 for a boarder. Public schools are funded by the state.
Business investment is falling dramatically, down a forecast 19 percent next financial year, state budget papers show. The state’s economy is predicted to contract by 4.25% in 2015-16 when imports and exports are excluded from growth figures.
Western Australia would be in recession, if it weren’t for high iron ore exports giving the impression that state economy is expanding.
‘Socially acceptable’
Those same iron ore exports coupled with the busy liquefied natural gas trade are also propping up growth nationally, with data released last week showing the Australian economy expanded in the first quarter by 3.1% from a year ago.
Mines and plants commissioned during better times are producing ore and gas at record levels even if the operators are exporting into a weak market.
“Here’s the rub – we are seeing strong volume growth but it’s not the sort of growth that generates lots of employment or wage rises,” said AMP Capital chief economist Shane Oliver.
“People aren’t seeing any change in their pay packets.”
The state has recorded the lowest quarterly private sector wages growth of all states and territories for every quarter since September 2014.
At a national level, the wage price index rose a mere 0.4% in the first quarter, the smallest increase since records began in 1997.
And some people have lost their jobs.
Official figures show that on a net basis almost 2,000 people left WA for other parts of Australia in 2014-15.
The pressure on WA’s private schools is evident despite efforts to curb fee increases. Between the start of 2015 and 2016, public school enrollments increased by 3,425 while private school numbers fell by 435.
One parent in Perth’s western suburbs, who requested anonymity, said state schools had improved and parents were also accepting the “new economic reality.”
“It seems to be more socially acceptable now to say we are going to Churchlands,” the parent said, referring to a local state-run school. “It used to be more about keeping up with the Jones.’”