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Royalties from iron ore to feed the steel mills of China have allowed Western Australia to emerge from the pandemic with a surplus while NSW and Victoria face years of growing debt. The mines in the Pilbara region will deliver Premier Mark McGowan $10.3 billion this financial year, allowing the resource state to record a $5.7 billion surplus and cut net debt for the third year running. The WA government earns more from iron ore than land tax, stamp duty and payroll tax combinedIron ore will deliver almost 90 per cent of WA’s royalty income, from mining and oil and gas extraction.

Iron ore has seen some impact from the Russian conflict with Ukraine, mainly centred around expectations of tighter steel markets as buyers self-sanction purchases from Russia. That has led to the expectation that steel mills in Asia will produce more in order to make up for lost Russian supplies. Iron ore is Australia’s biggest commodity earner. While this is expected to remain the case, the government actually expects revenue from the steel raw material to drop this fiscal year compared to last. Iron ore export earnings are forecast at A$135 billion for the 2021-22 year, down from A$158 billion in 2020-21, with lower prices the culprit given that volumes are expected to rise to 897 million tonnes from 867 million.

A global energy crunch resulting in soaring demand for gas, coal and oil has lifted the forecast for Australia’s resources and energy export earnings, now tipped to hit a record $425 billion this financial year. “In short, our resources sector is knocking it out of the park and underpinning our economic growth, our energy security and our national security,” Mr Pitt said. “Critical global shortages in energy and resource commodities have led to record prices for many of our commodities.”

“CME is extremely proud of the way WA mining and resources has been able to operate both safely and effectively during the pandemic, and we’re extremely grateful for the hard work, professionalism and dedication of our workforce.” Carruthers also added that the total sector-wide economic contribution was likely much more than $100 billion due to the supply chain.“More than $10.98 billion was contributed in State Government payments, with more than $24.21 billion contributed to the Federal Government.”

WA’s booming resources sector has again emerged as a star performer for the Federal Government, with iron ore the undisputed jewel in the crownNet debt in turn is $92.5 billion lower, forecast to hit $631.5 billion by the middle of the year rather than the $729 billion written into last year’s Budget. If iron ore holds its current price until the end of September, Treasury estimates an additional $15 billion will be generated in tax receipts enough to fund nearly half the cost of the NDIS next year. Iron ore was also singled out as accounting for one-third of the value of all goods and services exported by Australia in 2020-21 and continues to play an outsize role in fiscal repair.

The devastating Russian invasion of Ukraine has captured global ­attention. While the world’s focus is rightly on the human toll and suffering, the crisis has highlighted the need to end reliance on Russian oil and gas. To achieve that ambition, we must be pragmatic and invest in sensible alternatives, not engage in wishful thinking about renewable energy.

Royalty collections were $464 million higher due to elevated iron ore prices and the continued operation of the mining industry throughout the pandemic. “Our strong financial position is assisting us with our transition to living with COVID-19, providing us the financial capacity to provide support where needed. “Since December, more than $350 million has been announced in support to Western Australian businesses, taking the total support provided since the beginning of the pandemic to $1.6 billion.”