From the AFR:
Every dollar from a rebound in the iron ore price will be used to reduce the deficit, not spent on election bribes or boosting what are now looking to be meagre tax cuts.
Amid fears the extra tax revenue could be obliterated by global financial market volatility, senior sources told The Australian Financial Review that ministers should not bother putting their hands out for some of the extra revenue, which could be as much as $15 billion over four years.
The iron ore price, which recorded its biggest increase ever on Monday, remained volatile, could not be relied on over the long term and to do anything with any extra money other than reduce deficit would be “completely stupid”,’ said a senior Coalition figure.
Sensible enough. What would be even more sensible would be to not upgrade the iron ore forecast at all. The current outlook for $44-46 over the forward estimates is still too high. The Singapore 12 month swap is trading at $41 and that is very likely to fall. Leave it where it is.
