Updated price assumptions for four key Australian commodities have bolstered Treasury forecasts for the government’s tax take and economic growth.
Inflation in the mining industry and global market changes led Treasury to change its price settings for iron ore, metallurgical and thermal coal and LNG.
The budget papers released on Tuesday assumed a lift in the long-run spot price for iron ore, from $US55 to $US60 per tonne.
The price assumption for metallurgical coal was raised from $US130 to $US140, while thermal coal was set at $US70, up $US10 on the previous forecast.
LNG spot prices were estimated at $US10 instead of $US9.
The period over which the resource spot prices were assumed to return to long-term levels was also extended from two quarters to four quarters.
“The commodity price assumptions remain conservative and at the lower range of market forecasts,” Treasury said.
The market range for real long-run price estimates were: iron ore ($US60-$US92); metallurgical coal ($US140-$US200), thermal coal ($US70-$US175) and LNG ($US10-$US16)
The change has meant the level of nominal gross domestic product in the budget papers is higher than for the October budget.
And about one-fifth of the increase in tax receipts in the budget – which are expected to lift $40.7 billion in 2023/24 and by $115.7 billion over five years – reflects the update to commodity price path assumptions.
(Australian Associated Press)