as a barometer of Australia’s economic vitality using an anonymised sample of 1.3 million households drawn from the Bank’s 10 million-plus strong customer base.
Commonwealth Bank Chief Economist, Michael Blythe, comments:
“Viewpoint reveals that Australians are more optimistic about the economy now than earlier in the year. More than 80% of households believe their financial situation will improve or hold steady over the next six months.”
“Everything about the mining story is ‘big’. It was the salary payments and levels of spending in some of the country’s most remote, yet incredibly resources-rich regions that prompted the Bank to focus its second Viewpoint report on the impact of the mining industry on regional Australia.”
The impact of the resources sector
The international demand for our resources is providing a significant boost to Australian mining incomes and activity. The Viewpoint data shows this boost is particularly prevalent in the rural and regional centres of Northern Western Australia, Central Queensland and the New South Wales Hunter Valley. Viewpoint salary payments data reveals that mine workers in Northern Western Australia receive monthly salary payments up to 62% higher than the national average.
Life in these high growth regions is not without its downsides. In addition to tough working conditions and long hours, residents endure elevated costs of living and inflated property prices.
The Viewpoint report also shows how these gains are spread around the Australian economy. Up to 78% of the salaries paid by resources companies leave the Pilbara under ‘fly in, fly out’ agreements. In the Hunter Valley approximately 65% of wealth also drives in and drives out meaning local towns in the region flourish. Conversely, in Central Queensland 61% of salaries paid are spent in the same area, concentrating wealth in the region.
Within mining regions there is a significant salary disparity between industries. For example the average retail worker in the Fortescue region earns a staggering 70% less than someone employed within mining.
Michael Blythe went on to say, “Western Australia’s Pilbara is the jewel in our resources crown, and the halo effect on the State at large is evident, with 30% of the respondents to the Viewpoint survey reporting high levels of confidence in the economy. Somewhat surprisingly, Queenslanders have the lowest levels of confidence in our economy (only 20% see the economy as strong), despite the State being a significant beneficiary of the resources boom.”
The broader economy
In respect to consumer perception, Mr Blythe stated, “The nation’s positive economic outlook is closely linked to increased job security and financial stability. Confidence is not uniform however, with fluctuations apparent according to gender and geography.33% of men see the economy as strong compared to just 19% of women. Optimism is also weaker in regional Australia where 6% more respondents agreed the economy is „going downhillâ€Ÿ in comparison to their city counterparts.”
Job security is an area where Australia’s renewed optimism is most notable, with concern over job losses down from 24% to 18% over the past year. Concern has shifted to the pressures on household budgets. Close to one fifth of respondents (19%) now cite housing costs as their number one concern.
The Viewpoint Income and Savings Grid categorises people into one of five broad groups based on income and savings, and overlays this with sentiment. Notable shifts within the grid are people moving out of the ‘losing ground’ segment and into either ‘consolidating’ or ‘thriving’, representing increases in personal savings or a combination of increased earnings and savings.
Despite the current general ‘rosy’ economic outlook, household finances are still tight, with 53% of respondents stating they would struggle to raise $5,000 for a major unplanned expense. In addition, 46% would need to borrow money to pay an urgent bill. Women continue to be more likely than men to have to borrow the funds to make unexpected payments.
Rob Tanton, Research Director, NATSEM said “Commonwealth Bank data could be used to forecast ABS Household Financial Consumption Expenditure and Average Weekly Earnings while also giving a monthly indicator of these figures, proving a valuable tool to predict future trends.”