From The West:
The State Government is facing a $350 million blow to its already struggling Budget as the price of iron ore plummets, forcing Treasurer Ben Wyatt to look for even more savings.
Ahead of a surprise visit to WA today by Federal Labor leader Bill Shorten that will be dominated by talks about the GST, The West Australian can reveal a 30 per cent fall in the price of iron ore since March is pushing the Budget deficit for 2017-18 towards $2 billion.
Iron ore slipped below $US55 a tonne on futures markets this week, continuing a run of sharp falls driven by concerns about China’s manufacturing sector and big iron ore stockpiles.
In its pre-election Budget update, State Treasury assumed iron ore would average $US70.30 a tonne this year before edging down to $US66 through the coming financial year.
Instead, iron ore has averaged $69.90 this year and is on track to fall to $US61.40 through 2017-18.
Such a fall will reduce iron ore royalty payments by $350 million in the coming year, which was already expected to show a $1.5 billion Budget deficit. It is not just iron ore prices that are putting pressure on the Budget.
Crude oil prices are $US5 a barrel lower than recent Treasury forecasts, pointing to a further blowout.
Very droll. The damage is so hilariously worse than this. Iron ore is going to average $45 in 2017/18 so the hole is more like a developing singularity into which all of WA is being sucked, roughly $1.5bn in the first year then mushrooming to $5bn over the forward estimates.
But that’s just the beginning, as we know. The Budget is a great sack of lies put together by the delusional Dr Nahan. The key inputs are all hilariously inflated.
In order, population growth and consumption are supposed to rebound but on what? Population growth is down to 1% and falling fast versus a projected 1.3% and rising:
And wages keep crashing versus some hoped-for turnaround:
Dwelling investment is about to halve versus the projected 1.5% increase:
Business investment is going to halve versus the -17% hoped for:
The WA Budget remains a farce and unless Labor wants to be blamed for non-stop downgrades for its entire term, which is not great politics, then it should declare a dramatic “Nahan Emergency” when it theatrically opens the books over the coming weeks.
Then it should impose an huge new tax on the Pilbara miners. It’s either that or the people of WA pay, and sink from sight.
