PM won’t entertain commodity forecasting

Colin Brinsden, AAP Economics Correspondent
(Australian Associated Press)

Malcolm Turnbull isn’t about to become a commodity forecaster.

But the prime minister has welcomed a further rise in the iron ore price, which has struck a two-and-a-half-year high.

The iron ore price has risen above $US92 a tonne, well above what Treasury had been predicting at the time of the mid-year budget review in December.

“I didn’t make habit of predicting commodity prices when I was actually in business let alone as prime minister,” Mr Turnbull told Bloomberg Television when asked about the sustainability of the iron ore price.

“But obviously the rise is welcome, we are big exporter.”

At the time of the budget review, Treasury said there was “very considerable uncertainty” surrounding the outlook for iron ore after an unexpected price surge in 2016.

At the time it assumed the price would decline from an average of $US68 in the March and June quarters of 2017 to $US55 in the September quarter.

The higher price could potentially adds billions of dollars in tax revenue for the government, if it can be sustained.

Mr Turnbull also dismissed the idea the government’s infrastructure investment plans are being restricted by the threat of losing the country’s triple-A credit rating.

“There isn’t a reluctance to invest in economic infrastructure and we are doing so,” he said.

The government had a massive $50 billion infrastructure program, not including the national broadband network roll-out and investment partnerships with state governments and the private sector as part of its city deals policy.

While the government was focused on bringing the budget back to balance and reducing debt, it also wanted to encourage investment through its 10-year plan to reduce company tax, Mr Turnbull said.


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