04/09/2012 - 15:31

Iron ore plunge hitting budget: opposition

04/09/2012 - 15:31

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The state government has a $7.5 billion black hole in pre-election commitments that it will find harder to plug because of falling iron ore royalties, the Labor opposition says.

Opposition treasury spokesman Ben Wyatt told reporters this afternoon that while Liberal Premier Colin Barnett was complaining about losing $600 million in federal GST revenue, falling iron ore prices and the high Australia dollar were much bigger threats to his bottom line.

"Clearly, the plunging price of iron ore - (the WA) budget's predicated on $US127 (a tonne), we're now down to $US89 - is having a real impact on the budget," Mr Wyatt said.

"But what worries me more than the plunging price of iron ore is the rank mismanagement of the state's finances.

"There is a debt black hole of somewhere between $6.5 billion and $7.5 billion dollars in terms of unfunded commitments."

Mr Wyatt said the government had refused to shed light on how it would fund its proposed $1 billion light rail network, the $700 million Burswood Stadium, and a $440 million Elizabeth Quay waterfront project, which is currently under development.

Treasurer Troy Buswell admitted this week the high Australian dollar and falling iron ore and other mining royalties were hurting the state's finances.

Iron ore prices have fallen from $US149 a tonne in April to less than $US90/t this week, with spot prices for some low-grade ore plunging as low as $US79/t yesterday.

Lower iron ore prices are expected to wipe $1.5 billion off governmet revenue in a full year.

 

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