Investment gains to increase Pilbara business costs: report

Costs of living and doing business in the Pilbara have dropped since the mining construction boom but the region remains an expensive place to live and costs are now on the verge of rising again, according to a new report from the Federal Government’s Regional Development Australia Pilbara.

Released late last month, the Cost of Doing Business in the Pilbara report — which examined the state of costs across the region with a focus on the centres of Karratha, Port Hedland, Newman and Onslow — found the costs of accommodation, goods and services and water have come down significantly since the boom and last year the Pilbara lost its long-held place as the most expensive WA region for consumers, dropping to second place behind the Kimberley.

However it also found costs in some areas, especially insurance and airfares, are still very high, and on average it costs businesses about 70 per cent more to operate in Pilbara towns compared to Perth.

Port Hedland was found to be the most expensive town, followed by Karratha and Newman.

The report noted that since late 2017 rising resource sector investment was beginning to drive an economic upturn in the region, but that upturn was also expected to bring a rise in costs such as rents, house prices, construction and power, as well as an increase in wages, especially for skilled workers.

Employment and population in the region were also expected to increase.

RDA Pilbara chief executive Diane Pentz said the Pilbara was “on the cusp” of a moderate economic upturn and people needed to be aware of the cost implications.

“There certainly is a lot on the go, and the prognosis going forward is good, but that will impact on our cost of living up here,” she said.

The report also flagged impending cost issues for small businesses and non-governmental organisations as the region heads into a stronger economic environment.

The Pilbara’s small business sector lost at least 180 businesses between 2015 and 2017, largely due to high start-up and operational costs, and some NGOs have already started losing “substantial” numbers of staff to resource companies — a trend that undermined the sector during the boom. Mrs Pentz said the challenges facing small businesses and NGOs needed to be accounted for in policy.

“Policymakers need to remain focused on promoting and enabling an environment that reduces costs,” she said.

“With the mining boom ending, the critical issue is that the overall high cost structure will continue to discourage economic diversification, and that puts long-term sustainability at risk.”

The Cost of Doing Business in the Pilbara report is aimed at informing businesses, non-government organisations and development and government agencies about costs in the region to inform planning or policy.

RDA Pilbara compiled previous reports in 2013, 2014 and 2015 but has not released one for the past few years to avoid regional market fluctuations.

Mrs Pentz said the organisation planned to release another report in 2019.