Royalties from iron ore to feed the steel mills of China have allowed Western Australia to emerge from the pandemic with a surplus while NSW and Victoria face years of growing debt.
The mines in the Pilbara region will deliver Premier Mark McGowan $10.3 billion this financial year, allowing the resource state to record a $5.7 billion surplus and cut net debt for the third year running.
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.