WA is predicting its net debt will be stable at about 50 per cent of revenue for the next five years. In contrast,WA budget papers show Victoria spiralling to a 200 per cent debt-to-revenue ratio by 2026 and NSW reaching about 120 per cent.
The Pilbara miners – predominantly Rio Tinto,BHP,Andrew Forrest’s Fortescue and Gina Rinehart’s Roy Hill – are predicted to ship more than 850 million tonnes of iron ore in the 12 months to June 30 2022,at an average delivered price of $US139.5 a tonne.
The WA government earns more from iron ore than land tax,stamp duty and payroll tax combined.
McGowan,delivering his second budget as Treasurer on Thursday,is not betting on the iron ore bull market,which produced a record high price of $US236 a tonne a year ago,continuing.
Volatility in the iron ore price and the $US exchange rate are the largest risks to the McGowan government’s revenue,and with China consuming 70 per cent of global iron ore trade WA has a lot riding on one product to one market.
Wanting to avoid the fate of his Liberal predecessors –former premier Colin Barnett and then former state treasurer Christian Porter,who launched a spending spree on the assumption the last iron ore boom would continue,producing huge debt and a 2017 election defeat – McGowan,like the federal government,is conservative in his estimate of future prices.