According to Reuters article published on April 17, 2023, Australia will make a cautious revision to its commodity price assumptions in next month's budget, Treasurer Jim Chalmers said on Monday, a move that will likely provide a boost to the country's expected revenues.
Australia, the world's largest iron ore exporter and the second-largest exporter of coal, currently assumes long-term prices of $55 per tonne for iron ore and $60 per tonne for thermal coal - significantly lower than current spot prices of $137 and $188 respectively.
Chalmers told a news conference on Monday he had received guidance from Treasury officials that its current assumptions were outdated.
"They have a clear view and a firm view that the time is right to change those assumptions," he said.
"I've indicated throughout that my preference is that they remain conservative and cautious for good reason and I'm inclined to accept the advice that I've been provided."
He did not provide detail on what the new price assumptions would be.
A $10 per tonne upwards revision in iron ore prices in 2023/4 would add A$2.4 billion ($1.6 billion) to the country's nominal GDP of around $1.55 trillion and A$500 million in tax receipts, Treasury figures show.
In an interim budget in October, the Australian government said the war in Ukraine presented substantial upside risk to coal prices, but said weaker Chinese growth was a downside risk to iron ore, concluding that higher revenues from commodity prices in aggregate were "temporary".
It maintained its assumption that prices of Australia's key export commodities would return to long-term fundamental levels by the end of March 2023.
Chalmers is due to table the budget for the 2023/4 fiscal year on May 9.
($1 = 1.4914 Australian dollars)
