The Treasury has announced a lower-than-expected Budget deficit, with the difference mainly pinned to incorrectly forecasted iron ore prices.
Instead of falling to $US60 a tonne, as predicted earlier this year, the spot iron price rose to $US105 a tonne, with the rise credited to strong manufacturing levels in China, Australia’s biggest trading partner, as reported in The West Australian.
China’s demand has been described as resilient in the face of market downturns and the tariffs imposed by US President Donald Trump.
From the beginning of September 2025, the price of iron ore has risen $US3 per tonne, bouncing back from a low of $US94 in June. Year-to-date performance has seen the ore price rise 1.68 per cent.
It’s understood that more company tax revenue is generated when the price of ore, such as iron, increases, assisting in the reduction of government debt.
The government’s final budget outcome, published earlier this week, sat at $10 billion, well below the forecasted $27.6 billion in the pre-election March Budget.
The West Australian reported that Treasurer Jim Chalmers said the $17 billion turnaround was an example of “responsible economic management” without mentioning the rise in the price of iron ore as an assisting factor.
“We turned two very big Liberal deficits into two substantial Labor surpluses in our first two years and now in our third year, we’ve been able to get the deficit much smaller as well,” Chalmers said.
“In dollar terms, this is the biggest ever positive improvement in the Budget in a single, parliamentary term,” he said.
Australia is the world’s largest iron ore exporter and second largest producer, accounting for around a third of global production.
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