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Parliamentary Questions


Question Without Notice No. 1196 asked in the Legislative Council on 3 November 2020 by Hon Dr Steve Thomas

Parliament: 40 Session: 1

IRON ORE ROYALTY REVENUE

1196. Hon Dr STEVE THOMAS to the minister representing the Treasurer:

It is good to be back! I refer to the 2018–19 to 2020–21 mini boom in iron ore royalties.

(1) What is the current spot price of iron ore as measured by the government?

(2) What was the average iron ore spot price from 1 July 2020 to 31 October 2020?

(3) What is the difference between the answer to (2) and the 2020–21 budget price of $US96.60 a tonne?

(4) How much additional iron ore royalty revenue has the government received —

(a) in 2018–19 above the 2018 budget expectation;

(b) in 2019–20 above the 2019 budget expectation; and

(c) in 2020–21 to date above the 2020 budget expected income to date?

Hon STEPHEN DAWSON replied:

I thank Hon Dr Steve Thomas for some notice of the question. The following answer has been provided to me by the Treasurer.

(1) It is $US119.15 per tonne.

(2) It was $US118.2 per tonne.

(3) The answer to (2) is the average over a four-month period, whereas the budget forecast is a 12-month average.

(4) (a)–(c) In 2017–18, iron ore royalties were $80 million lower than the original budget estimate; in 2018–19, $1.722 billion higher; and in 2019–20, $2.199 billion higher. An update on the revenue collections for 2020–21 will be provided in the midyear review in December. All this information is available on the Treasury website.

Iron ore royalty revenue is only one of many sources of government revenue that may move up or down. The McGowan government's budget is based on a prudent iron ore methodology given that history has shown that iron ore prices are very volatile. This seeks to ensure that the government lives within its means. As a responsible Treasurer, I make no apology for making conservative revenue assumptions in my budgets. In the case of iron ore, price assumptions are consistent with commonwealth forecasts. I do not intend to repeat the mistakes of the former Liberal–National government and lock in high revenue assumptions based on a temporary spike in iron ore prices. It was this cavalier approach to public finance by the former Liberal–National government that delivered nine budgets with nine cash deficits totalling $27.8 billion.