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Parliamentary Questions


Question Without Notice No. 825 asked in the Legislative Council on 20 August 2020 by Hon Peter Collier

Parliament: 40 Session: 1

IRON ORE ROYALTY REVENUE ASSUMPTIONS — 2019–20 STATE BUDGET

825. Hon PETER COLLIER to the minister representing the Treasurer:

I ask this question on behalf of Hon Dr Steve Thomas, who is away on urgent parliamentary business.

I refer to question without notice 759 asked last Thursday, 13 August 2020.

(1) What was the average spot price of iron ore during the week since I asked that question?

(2) How much higher than the 2019 budget estimate of 2020–21 iron ore prices is the answer to part (1)?

(3) How much higher than the 2019 budget and the 2019 midyear financial projections have iron ore royalties been in the 2020 calendar year to date?

(4) I refer to the social article in The West Australian of 19 March 2020, in which, when the Treasurer was describing his daily email of the iron ore spot price, he was quoted as saying, ''I can't actually go to bed until I get that email'', and that at the price in March, the paper suggested he ''could drift off to sleep peacefully, counting leaping dollars instead of sheep''. To what extent is the high iron ore price now propping up the government's budget and its COVID-19 recovery plan?

Hon STEPHEN DAWSON replied:

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

(1) For the five weekdays from 13 August 2020 to 19 August 2020, the iron ore spot price averaged $US124.20 per tonne.

(2) The 2019–20 budget estimate for 2020–21 was $US65.60 per tonne. Given the movement in the price of iron ore over the course of a year, comparing the average price over a week with the forecast price over a year is not a meaningful comparison.

(3) As noted in the response to question without notice 113 asked on 19 February 2020, royalty revenue forecasts are based on whole financial years.

(4) Iron ore royalties represent only a portion of general government revenue. State taxes, GST and other grants from the commonwealth also impact the state's budget position. There is an inference from the honourable member's question that the state's iron ore price forecast should be more bullish. The honourable member may care to note that the commonwealth government's forecast in its Mid-Year Economic and Fiscal Outlook was an equivalent of $US63.90 a tonne in 2020–21, whereas the state's midyear review estimate was $US66.20 a tonne.