QLD has also had a major boost from mining, but has done little to stimulate other industry outside of mining.

While money has been spent by the state government on new infrastructure, money has to be found to eventually maintain that infrastructure.

The more infrastructure built, the more money has to be found to maintain it, and already the QLD state budget is in deficit by over $1 billion.

A number of Middle Eastern countries have squandered their wealth from oil, and states such as QLD and WA are in a similar process.

A Big WA in the above case can only mean Pitstock Politics, meaning we are only in front of Queensland because we have iron ore rather than coal.

Also reminds of an odd tale concerning pitstock politics when a worker digging a well excitedly tells his master that he has struck gold on the side of the hill, but the master tells the worker that gold had been found years ago down another well.

But you are now much richer, says the worker.

Aye, says the squire, but leave it there till we need it.

Certainly gives reminder of the many differences between need and greed.

Bushbred
I was recently involved in the shipment of scrap steel to China (they mix it with iron ore in the smelters to make various grades of steel).

We send them our iron ore and coal, and they send us cars and various other items. We then send them scrap steel that they eventually send back to us as cars and various other items.

Guess who is doing the value adding each step along the way, and who is making the most profits?

I don’t know about the premier of WA, but the QLD premier does like to have their photo taken each time a new coal mine is opened.

The caption should read “The Premier Of QLD Places More Eggs In China's Basket”

A timely article, Peter, especially in the light of recent economic events and offshore oil catastrophes, which demonstrate the fragility of WA's economic strategies.

It would be hard to find an personal investment advisor these days who wouldn't recommend that you have a diverse (balanced) portfolio. I can see no reason why such advice should not be heeded by governments, who are, essentially our "common- wealth" portfolio managers.

Peter points out something that we all know- China's economy is fragile while it continues to be heavily skewed towards exports. Ours is also heavily skewed- towards resources. But unlike China, which is rapidly building up its internal markets, we are becoming increasingly reliant on a narrow range of exports.

The above has fairly wide acceptance. The problem is, how do we diversify while maintaining our present wealth level? In 1999- before the present boom- the Western Australian Technology and Industry Advisory Commitee (TIAC) produced a report "Western Australia's Minerals and Energy Expertise: How can it be optimised? - Growing the R&D Sector" (http://www.commerce.wa.gov.au/sib_tiac/index.html). This report outlines a robust strategy for economic diversification, essentially based on the Danish model. Essentially, the strategy entails deliberately using some of the skills developed to supply the resource industry to develop goods and services for similar industries elsewhere and eventually goods and services for different industries at home and abroad. It's a win-win situation for both present industries and potential new industries. The Minister for Economic Development at that time was very much in favour of the idea, which recommended that about 10% of the royalty stream be used for diversification-based R&D. The Minister for Resources at that time- now the WA Premier- was very much opposed to the idea on a "stick to what you know best" basis.

Perhaps if State royalties won't be used for this purpose then some of the proposed new Commonwealth (ie common-wealth) resources tax could be deployed.

Eggzactly Vanna, my sentiments too, for many years. However, we all should be taking ACTION to innovate and engineer [including myself] in addition to talking!

No one living outside of WA should believe much of what has been written in this article. It's mostly extreme exaggeration and only the most cynical, pessimistic person could accept the predictions of doom and gloom outlined by McMahon. No one believed Hanrahan when he said, 'we'll all be rooned' and no one should believe that West Australians won't work their way through the various problems and issues discussed in the article.