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Parliamentary Questions


Question Without Notice No. 759 asked in the Legislative Council on 13 August 2020 by Hon Peter Collier

Parliament: 40 Session: 1

IRON ORE ROYALTY REVENUE ASSUMPTIONS — 2019–20 STATE BUDGET

759. 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 the government's 2019–20 budget, which predicted an iron ore price of $US72.50 in 2019–20 and a price of $US65.60 for 2020–21, which in the midyear review of December last year were upgraded to $US85.80 for 2019–20 and $US66.20 for 2020–21.

(1) What is the current spot price of iron ore and how does this compare with those estimates?

(2) If the price today is around $US118 a tonne, can the Treasurer confirm that it is over $US50 a tonne over the predicted price?

(3) At $81 million of additional royalty revenue per US dollar rise in price, can the Treasurer confirm that this would be worth $4 billion extra a year, or $337 million a month, or $78 million a day?

(4) Given this massive increase in financial capacity, why has this state's COVID response been so modest, especially compared with other states that do not have an iron ore windfall to spend?

Hon STEPHEN DAWSON replied:

I thank Hon Dr Steve Thomas for some notice of the question. This is one of his ''Thursday questions'', as he texted me earlier on. The following answer has been provided by the Treasurer.

(1) The single day spot price on 11 August 2020 was around $US120 a tonne, based on the most used iron ore spot price indices.

(2) The iron ore price forecast relates to the full-year average, not a single daily spot price.

(3) The iron ore spot price relates to a single day. To achieve the annual and monthly estimates in the member's question, current prices would need to be sustained for the whole period. Note the revenue impact of a higher iron ore price cannot be determined in isolation and without factoring in the impact of other variables, such as the exchange rate and iron ore export volumes.

(4) The state government's $5.5 billion WA Recovery Plan is in no way a modest response to the COVID-19 pandemic and compares favourably with the magnitude of responses in other jurisdictions. As reported in, I think, Tuesday's The Australian, Western Australia's COVID-19 stimulus spending as a percentage of revenue is higher than that of all other states and territories apart from Tasmania. As a share of the domestic economy—that is, state final demand—it is estimated that Western Australia's response is the largest of all states and territories.