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Australia's dangerous economic divide Add to ...

Wage inflation is so acute in some parts of Western Australia that a bartender might soon be able to command an annual salary of close to $100,000.

"If we eventually have to pay someone $100,000 a year to pull beer in Melbourne, then we are stuffed," Mr. Freebairn says.

Western Australia's mining towns are indeed booming, but also struggling with their new-found prosperity and growth. Take Newman, whose 5,000 full-time residents mine and process the key steel-making ingredient, iron ore, at BHP Billiton Ltd.'s enormous Mount Whaleback operations. Residents who don't work in the mining industry have jobs that support those who do.

Yet while miners are making $100,000 a year on average, essential government services are still lacking. Pregnant women from Newman must spend the final four weeks of their term in Perth, 1,168 kilometres to the south - a 12-hour car journey or two-hour flight. The hospital in Newman does not have an anesthetist and therefore can't deliver babies.

When they do return to Newman, finding affordable child care becomes a problem. Recently, a new daycare facility was opened to try to ease a chronic shortage. But at $100 a day for each child, it is too expensive for many residents and remains half-full. Regardless, the daycare's director, Kaye Van Nieuwkuyk, says she is still having difficulties finding staff, owing to Western Australia's massive labour shortage.

"I just wear my recruitment cap all the time," she explains.

Ranald Taylor, a senior economics lecturer at Murdoch University in Perth, says the riches and difficulties created by the mining boom have vaulted Western Australia and the resource sector onto the national political stage.

"The amount of money the mining companies have to influence - it is mind-boggling," Prof. Taylor says.

And it appears that sphere of influence is going beyond lobbying and political donations. Australia's richest woman, Gina Rinehart, chairwoman of Hancock Prospecting Pty Ltd., recently made a surprise $165-million investment in the Ten Network private television empire. Australian media is speculating that Ms. Rinehart, whose fortune was made in iron ore and coal mining, is seeking to have more political influence through her 10-per-cent stake in the national network.

Still, Mr. Taylor points out that the new power Western Australia has is being driven largely by outside forces. Just as the West has helped to prop up Australia's economy during the global financial crisis, the Western state's economy remains dependent on the financial strength of China.

"It just so happens we have the things China needs to invest in," he says.

With a fragile hung parliament, the task of appeasing the upstart West while keeping the rest of the country economically viable amid persistently slow global growth, falls to Australia's Prime Minister, Ms. Gillard. Her successes, setbacks and potential failures will very likely provide a road map for her Canadian counterpart.

Until the global resource boom runs out of steam, Canada's West, as well as more recent additions to the commodity club such as Newfoundland, will continue to gain more political sway. Ignoring the concerns of the country's most populous central provinces, however, will only serve to intensify Canada's own version of Australia's two-speed economy.



















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