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- The WA Government has managed to hand down a $1.2 billion surplus, despite being in the midst of a pandemic and associated recession
- The positive result is mainly due to higher-than-expected iron ore prices, delivering more money back into the state’s coffers
- Specifically, the commodity’s price is 26 per cent higher than the WA Treasurer had forecast at US$92.90 per tonne (around A$139.40 per tonne)
- Additionally, WA’s biggest competitor Brazil has been badly affected by the spread of COVID-19
- Along with the surplus, the Government announced big investments in transport and further support for households
The Western Australian Government has managed to hand down a $1.2 billion surplus in its State Budget, despite being in the midst of the COVID-19 pandemic and associated recession.
The surplus is less than previously forecast pre-coronavirus, however, in comparison, the Federal Government’s recent budget handed down the biggest deficit in modern times.
Iron ore
WA’s budget surplus is primarily due to the resurgent iron ore price, which delivered more money back to the state’s own coffers offsetting the $5.5 billion the State Government has spent on recovering from COVID-19.
State Treasurer Ben Wyatt said the commodity price had hovered around US$92.90 per tonne (around A$139.40 per tonne) throughout the year — 26 per cent above the Government’s December prediction.
WA also benefitted of Brazil’s misfortune, with many of the country’s iron ore mines badly impacted by the rampant spread of COVID-19.
As a result of the higher-than-expected price, WA has received over $7.6 billion in royalty payments throughout 2019-2020, allowing it to walk out of the pandemic with its budget in the black.
The State Government expects similar returns in 2021-22, however, considering the iron ore price is currently trending above US$120 per tonne the commodity could deliver even more.
The Spend
The WA Treasurer said the boom in iron ore prices would help fund a $27 billion infrastructure spend over the next four years, with a chunk of that money earmarked to flow to the Government’s flagship Metro train network.
It would also help deliver relief to households, with the State Government announcing it was planning to offer electricity account holders a $600 credit. Other utilities have also had their prices frozen, while support for those unable to pay has been extended.
Over $300 million has also been set aside to bring an additional 800 police officers online, to help police the state and maintain its hard border — which isn’t predicted to re-open until after the March 21 State Election.
Speaking about WA’s surplus, and wider criticism from the State’s Opposition about having remained in the black during a pandemic, Treasurer Ben Wyatt said WA’s experience of COVID-19 was relatively minor.
“The West Australian experience of the coronavirus is very different to the experience in other states,” Ben explained.
“We have the best economic data of any state in the nation and that highlights we have got it right,” he added.
