By Michael Roberts | posted on November 20, 2020
WITH the iron ore price at its highest level since the mining boom, a South West Liberal MP is questioning whether the State Government has spent enough on WA’s COVID-19 recovery fund.
Shadow Finance Minister Steve Thomas said the Government is “making a killing” off iron ore royalties and should be investing more of that money back into the economy.
Despite the economic burden of the pandemic, WA was the only state or territory to record a budget surplus in the 2019/20 financial year.
“The State Government’s COVID economic response has been modest at best, but it has received a bonanza of royalty revenue that should have allowed greater support for struggling families, businesses and communities,” Dr Thomas said.
“With iron ore currently around US$120 a tonne today, the State Government continues to rake in even more cash. And the best predictions are that the price will stay up for the foreseeable future.”
Bumper iron ore values have come after a dam burst last year at a mine in Brazil, killing more than 230 people and forcing the world’s largest iron ore producer Vale to suspend a number of its operations.
In the perfect storm for Australian iron ore players, China has ramped up steel production as part of its COVID-19 economic stimulus package.
It means WA received about $2.2 billion more from its iron ore royalties than originally estimated for the 2019/20 financial year.
In response to Dr Thomas’ comments, WA Treasurer Ben Wyatt said the Government wouldn’t base its spending off a volatile market and would “live within its means”.
“The McGowan Government’s sensible and strong budget management has given us the capacity to fund the multi-billion-dollar WA Recovery Plan and a record $27 billion asset investment program over the next four years to help drive WA’s economic and social recovery across the whole state,” he said.
“I do not intend to make the same mistakes as the former Liberal-National Government that locked in high revenue assumptions based on a temporary spike in iron ore prices.”
While the majority of business owners in the Great Southern are busier than ever, Mr Thomas argued the WA Government needed to help those still doing it tough.
“They have the capacity to be more generous,” he said.
“Not just tax relief, but direct grants to businesses who have struggled and showed significant downturn.
“Most regional accommodation providers have picked up, but if you are in the events industry, they are still struggling.
“The top end of the tourism industry is still struggling.”
But Mr Wyatt – who announced this week he will be retiring from politics ahead of the March State Election – said WA’s economic response to COVID-19 had been world-leading.
“Our management of the State’s finances and the economy has been affirmed by various global credit rating agencies which commended our economic management pre-pandemic and our economic response to the pandemic,” he said.
