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.