The Western Australian Government is getting desperate. After last year’s State Budget forecast delusionally high iron ore prices as far as the eye can see, along with surging royalty revenue (see below graphics), it was then forced to sharply downgrade its forecasts, with the State’s Mid-year Financial Projections Statement revealing a $1.6 billion cut to revenues in 2014-15, and an unprecedented $5 billion downgrade over the forward estimates period (2014-15 to 2017-18).
With the iron ore price falling further, and no end in sight, the State Government has finally come to the conclusion that its Budget assumptions are still too optimistic, and it is now seeking ways to plug the revenue black hole. Enter former Nationals leader, Brendon Grylls, who is pushing to change the calculation of mining royalties to a flat fee, rather one based on value:
