Iron ore price to fall to $US66/t

Last year’s boom in iron ore prices underpinned a massive surge in WA government revenue but the good times are coming to an end, with treasury assuming prices will fall sharply.

Total government revenue surged by 25 per cent to $40.1 billion in FY21, ensuring premier Mark McGowan was able to announce a large operating surplus.

The largest contributor was a 44 per cent lift in royalty income to $12.1 billion.

Within this total, iron ore contributed $11.3 billion.

Treasury has estimated that iron ore royalties will dip to $9.2 billion in the current financial year.

While that is down from FY21, it is nearly double the amount treasury had estimated in its pre-election financial projections early this year.

The fall in revenue will be much larger in later years, sliding to about $5 billion per annum.

The revenue projections are based on the benchmark iron ore price falling from an average of $US154.50 per tonne in FY21 to $US121.30/t in FY22 and $US66/t across the forward estimates.

The estimate for the out years is simply the long-run average, rather than being a forecast.