How do we pay for all this largesse? Thank the sugar hit from iron ore. Prices exceeded $US200 per tonne last week, driven by global demand and lower Brazilian output due to COVID-19. It’s hard to believe iron ore prices were “only” $US80/tonne in April 2020. Australia’s iron ore exports reached $AU116 billion in 2020, with Chinese imports exceeding 2019 totals, despite considerable bilateral trade friction.
Federal revenue growth from resources exports means budget repair should be more rapid. COVID-19 measures drove the 2020-21 budget into a $213 billion deficit, but strong minerals prices (despite coal’s fall) should improve the bottom line by $30 billion-plus. Moreover, Australians boosted household savings at a record rate in 2020, banking $130 billion, raising total deposits to more than $1.1 trillion.