Australia’s mining exports are expected to drop more than A$100 billion to 2027-2028, according to a federal budget update.
Mining exports have slumped due to a lack of iron ore demand and China’s lagging economy, the Mid-Year Economic and Fiscal Outlook says.
There are “substantial pressures on the budget which need to be accounted for in the mid year budget update: a slowing growth, a write down in mining exports as well as a write down in company taxes”, Treasurer Jim Chalmers said on Sunday.
The budget will include extra spending for veterans, Medicare, early childhood spending, and natural disasters, said Chalmers. It will be released on Wednesday.
“In the last budget, we spent an extra $6.5 billion because we'd been processing [veterans’ compensation] claims more quickly, and in this mid year budget update there will be another $1.8 billion for veterans,” he said.
The drop in mining export revenues will give the government around $8.5 billion less in company taxes.
This is the first time the Treasury has downgraded its mineral exports forecast since 2020.
“We’re getting the budget in much better nick and building up Australia’s buffers to manage global uncertainty but we’re not immune from challenges coming at us from around the world,” said Chalmers.
Chalmers will announce appointments to the Reserve Bank’s new monetary and governance boards early this week.