Is the Budget at risk from commodity prices?

With iron ore crashing and likely to be pressured over 2023 it is timely to once again ask, will Aussie nominal growth be whacked and the Budget undershoot revenue targets?

Here is the requisite paragraph from the Chicken Budget:

Key commodity prices are assumed to decline from current elevated levels by the end of the March quarter 2023: the iron ore spot price is assumed to decline from US$91/tonne to US$55/tonne free on board (FOB); the metallurgical coal spot price is assumed to decline from US$271/tonne to US$130/tonne FOB; the thermal coal spot price is assumed to decline from US$438/tonne to US$60/tonne FOB; the oil price (TAPIS) is assumed to decline from US$108/barrel to US$100/barrel; and the LNG price is assumed to decline from US$934/tonne to US$630/tonne.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.