According to the latest projections from Western Australia’s Department of Treasury, the state’s budget surplus has been revised up to $3.1 billion due to the higher-than-expected iron ore price boosted by the surge in Chinese demand, along with an uptick in the residential property market. The increase in budget is expected to drive down debt and speed up budget repair.
$1 billion more than originally forecast
In December’s mid-year economic review, a surplus of $2.2 billion was forecast for this financial year. This has now been revised to $3.1 billion, leaving popular state Premier Mark McGowan in an advantageous position ahead of the state election on March 13.
Resources sector wins big
The current windfall was driven by the resource sector, which had ensured the smooth working of WA’s lucrative mining operations despite the threat of the pandemic. The resource sector conducted regular testing of workers to prevent COVID-19 and relocated many east coast staff to WA, managing the border war.
The resources sector is now benefiting from the surge in iron ore prices, which had reached a nine-year high in December. The total royalties are expected to reach $10.7 billion this year, compared to $8.7 billion projected at the end of last year.
The mining sector had registered zero community transmissions of COVID-19 for 10 months. WA’s unemployment rate remains the lowest across all states, at just 6.2%.
Increased activity in residential property market
The strong financial position of WA was also fueled by the strong activity in the residential property market. The state had reported better-than-expected property stamp duty.
Criticism from the Liberal opposition
Opposition Leader Zak Kirkup remained critical of Mark McGowan’s actions, including the $43 million support package declared for small business affected by the five-day lockdown, and the $500 offset on electricity bills.
Kirkup cited the need to support small businesses, the tourism industry, and the state’s health system and called them urgent issues that needed immediate addressing.
