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Published on January 8th, 2012 | by john.weir

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Perth businesses under siege as mining jobs boom

Businesses in Perth are facing a constant fight to hire and keep staff as the mining industry across Western Australia continues to attract workers.

According to the Sydney Morning Herald, the high costs of running companies in WA’s capital city, allied to foreign competition and the migration of key skilled workers to mining companies is closing many businesses. Perth remains one of the most expensive cities in Australia, with a high cost of living- a coffee costs $5.50, a truck is 15 per cent more expensive than in Melbourne, and average male earnings are more than $270 a week higher than the national benchmark.

And the rising costs are particularly affecting businesses ; in the 12 months to the end of October, 755 WA companies entered administration, a figure almost 30 per cent higher than for the previous 12 months.

According to Cameron Belyea, a partner in Clayton Utz’s Perth office, companies linked to mining – especially small and mid-sized mining services operators – make up a decent proportion of those going under. Often, they have borrowed to gear up for the boom, only to be felled by the long lead times in the resources industry and acute staff shortages.

”The labour shortage here is intense and it’s taking people away from alternative careers as fabricators, plumbers, painters,” Belyea says. ”A lot of people are voluntarily liquidating their small businesses because they don’t have the labour and see the opportunities for themselves on the mines. They’ll get paid more, they’ll get better conditions.

”As mining is cyclical, those jobs will go when demand for minerals and energy eases; that is when we will see the worst of mining services-related failures.’

The biggest stress is housing. Perth is still recovering from a boom-fuelled real estate craze that saw the median house price double between 2001 and 2006 to more than $400,000. Even last year, the Perth median house price surged to $505,000, but has since dropped back to $460,000.

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