Iron ore riches deliver again, as Treasurer prepares to upgrade budget bottom line by as much as $2 billion

A resurgent iron ore price is poised to deliver Western Australia a $2 billion Christmas present, as the State Budget reaps a royalty reward. Rita Saffioti’s post-election budget baked in a conservative iron ore price of $US72 per tonne, amid concerns about the impact of Donald Trump’s threatened tariffs and slowing economic growth in China. But the iron ore price has averaged $US103.17 since then, which could boost predicted royalties revenue for 2024-26 from $6.6 billion to as much as $9 billion — if the good fortune continues. Analysts are still predicting the price to fall next year but Goldman Sachs has revised its 2026 iron ore forecast from $US88 per tonne to $US93, citing “steady” steel production in China. Premier Roger Cook vowed any extra windfall will be put towards health and housing, and the Treasurer promised there will be further investment in coming weeks. “We’re investing WA’s royalties into priorities like health, with our new $1.5 billion Building Hospitals Fund,” Ms Saffioti said. “We’ve also invested a record $5.8 billion in housing and homelessness since 2021. “Our Government will continue to leverage its strong financial position to invest where it is needed most, with further investment to be announced as part of the Mid-Year Review budget process over the coming weeks”. Gold revenue will also be significantly higher, when the Budget’s mid-year review is revealed in late December, with the price of gold surging above $US4000 an ounce. Chamber of Minerals and Energy WA chief executive Aaron Morey said conservative Budget forecasts left plenty of upside. “Billions of dollars in royalty upgrades in the days before Christmas has become an annual Western Australian tradition,” he said. “WA’s world-leading standard of living is built on the bedrock of those royalties, which fund everything from roads and train lines to schools, hospitals and police stations – and the teachers, medical staff and police officers they employ. “Supportive government policy that doesn’t undermine the competitiveness of our resources sector is critical to ensure our industry can continue to underpin the State’s budget for generations to come.” Ms Saffioti stopped short of guaranteeing no change to royalty rates when asked, but said the results are due to “strong” budget management. “We’re proudly on track to deliver our eighth consecutive surplus, with debt remaining more than $12 billion lower than projected under the previous Liberal-National Government,” she said. Though lower than the $41 billion the Barnett Government was forecast to reach by 2020, total public sector net debt increased by $1.4 billion during the three months to 30 September to stand at $31.5 billion.