Boom times for Western Australia

PERTH - When Daniel Stojanoski failed to land an IT job in Sydney, he headed west. Now he earns A$96,000 ($116,000) a year driving a 200-tonne truck at BHP Billiton's iron ore mine in Western Australia.

"I went for the money," said Stojanoski, 26, who pockets almost double the average wage and 16 per cent more than a systems analyst. He's among thousands of workers from Australia's eastern states trekking west as a China-fuelled minerals boom creates the nation's best-paid workforce and hottest housing market.

The cross-country migration symbolises the quandary of Australia's central bank as it tries to set interest rates for the whole country. While Western Australia's economy grew at a faster pace than China's in the first quarter, New South Wales and Victoria are being left behind.

In Perth, "shoppers are deciding the colour of their new Porsche", said John Nicolaou, an economist at the West Australian Chamber of Commerce & Industry. "A Sydney shopper is trying to afford another box of breakfast cereal."

Western Australia's economy expanded 10.6 per cent in the first quarter from a year earlier, compared with 2.1 per cent in NSW and 4 per cent in Victoria. China's economy grew 10.3 per cent.

"There are two economies in Australia at the moment," said Paul Ritchie, spokesman at Australian Business, a Sydney-based group that represents 28,000 companies. "Another interest rate rise this year will cripple the NSW economy."

The Reserve Bank of Australia had to weigh what was best for the country's six states and two territories, Deputy Governor Glenn Stevens said this month. "There's a question of whether the leading edge pulls everybody faster or the trailing edge drags everybody down, and which one will it be," he said.

The western state, with two million people and a third of Australia's landmass, supplies 17 per cent of the world's iron ore and is the second-largest nickel producer. Its mineral exports to China surged 118 per cent to A$7.5 billion in 2005 from 2004.

One in five West Australian workers is employed in mining or associated industries with the number of jobs swelling to 55,000 from 46,000 in 2005 from the previous year. Almost 95,000 people moved to the state last year alone.

Even so, Perth-based nickel miners Mincor Resources and Minara Resources are struggling to find workers and meet orders. Western Australia's 3.5 per cent jobless rate is the lowest ever recorded in any state.

"We can't expand fast enough to meet this demand," said Jim Reeve, Mincor's chief operating officer. Minara's CEO, Peter Johnston, said Australia's second-biggest nickel producer needed more engineers.

"This may be the greatest mining boom we have ever seen," West Australian Treasurer Eric Ripper said. "It's trickling right through the economy."

Perth realtor Willie Porteous is making the most of it. He's asking a record A$16 million for a four-bedroom house overlooking the Swan River - almost triple the price in 2002.

Home prices are rising by A$1000 on average a week, says the Real Estate Institute. In Sydney, a boom city three years ago, prices fell 3.6 per cent in the first quarter from a year earlier.

- BLOOMBERG