❓ Mrs. Roberts questions the Treasurer on the impact of exchange rate fluctuations on the state budget, specifically regarding an 8c difference equating to a $480 million impact. The Treasurer defends the budget estimates methodology, citing reliance on ABS statistics and acknowledging the volatility of the international economy.
AnsweredQoN 298Legislative Assembly
QuestionView source ↗
STATE BUDGET 2011–12 — EXCHANGE RATE ASSUMPTION
I have a supplementary question. Given that a 1c difference makes a $60 million difference to the government’s bottom line, if the figure is out by 8c, will that not equate to $480 million? I also note that the Treasurer did not answer the question about population growth at all. Mr C.C. PORTER
I have a supplementary question. Given that a 1c difference makes a $60 million difference to the government’s bottom line, if the figure is out by 8c, will that not equate to $480 million? I also note that the Treasurer did not answer the question about population growth at all. Mr C.C. PORTER
AnswerView source ↗
That population growth, as I understand it, is based on statistics from the Australian Bureau of Statistics that are provided to us. That is my understanding, but I will double-check that for the member. Again, we can do several things with budget estimates. We can put together a team of expert analysts and ask them by jury consensus what the exchange rate will be in four years’ time and what the iron ore price will be in four years’ time, or we can adopt consistent methodology from budget to budget based on accurate information about what is the best predictive measure, and that is what we have done. We have used ABS statistics for population data and we have used two formulae with respect to iron ore pricing and with respect to the dollar. The member’s point is: if the dollar does not drop to 74c, is there a significant loss to the state budget? Yes, there is. If the iron ore price does not drop to $US87 per tonne, is there a significant benefit for the Western Australian budget? Yes there is, and I have nominated what that is. Therefore, these things have a tendency to balance out, but it proves precisely the point of the answer from the Premier to the Leader of the Opposition’s question that estimates are estimates; they are our best educated guess based on formulae about what will happen in four years’ time. Let me say that the international economy is very, very volatile, so we are doing our best with the estimates, and if members opposite want to ask questions about whether there is a distinction between an estimate and a target that we are trying to hit, please ask because I have had a good look through the budget to see how they met their estimates and whether they hit their targets, and it is not a very attractive scenario.
Mr C.C. PORTER replied: That population growth, as I understand it, is based on statistics from the Australian Bureau of Statistics that are provided to us. That is my understanding, but I will double-check that for the member. Again, we can do several things with budget estimates. We can put together a team of expert analysts and ask them by jury consensus what the exchange rate will be in four years’ time and what the iron ore price will be in four years’ time, or we can adopt consistent methodology from budget to budget based on accurate information about what is the best predictive measure, and that is what we have done. We have used ABS statistics for population data and we have used two formulae with respect to iron ore pricing and with respect to the dollar. The member’s point is: if the dollar does not drop to 74c, is there a significant loss to the state budget? Yes, there is. If the iron ore price does not drop to $US87 per tonne, is there a significant benefit for the Western Australian budget? Yes there is, and I have nominated what that is. Therefore, these things have a tendency to balance out, but it proves precisely the point of the answer from the Premier to the Leader of the Opposition’s question that estimates are estimates; they are our best educated guess based on formulae about what will happen in four years’ time. Let me say that the international economy is very, very volatile, so we are doing our best with the estimates, and if members opposite want to ask questions about whether there is a distinction between an estimate and a target that we are trying to hit, please ask because I have had a good look through the budget to see how they met their estimates and whether they hit their targets, and it is not a very attractive scenario.
That population growth, as I understand it, is based on statistics from the Australian Bureau of Statistics that are provided to us. That is my understanding, but I will double-check that for the member. Again, we can do several things with budget estimates. We can put together a team of expert analysts and ask them by jury consensus what the exchange rate will be in four years’ time and what the iron ore price will be in four years’ time, or we can adopt consistent methodology from budget to budget based on accurate information about what is the best predictive measure, and that is what we have done. We have used ABS statistics for population data and we have used two formulae with respect to iron ore pricing and with respect to the dollar. The member’s point is: if the dollar does not drop to 74c, is there a significant loss to the state budget? Yes, there is. If the iron ore price does not drop to $US87 per tonne, is there a significant benefit for the Western Australian budget? Yes there is, and I have nominated what that is. Therefore, these things have a tendency to balance out, but it proves precisely the point of the answer from the Premier to the Leader of the Opposition’s question that estimates are estimates; they are our best educated guess based on formulae about what will happen in four years’ time. Let me say that the international economy is very, very volatile, so we are doing our best with the estimates, and if members opposite want to ask questions about whether there is a distinction between an estimate and a target that we are trying to hit, please ask because I have had a good look through the budget to see how they met their estimates and whether they hit their targets, and it is not a very attractive scenario.
The member’s point is: if the dollar does not drop to 74c, is there a significant loss to the state budget? Yes, there is. If the iron ore price does not drop to $US87 per tonne, is there a significant benefit for the Western Australian budget? Yes there is, and I have nominated what that is. Therefore, these things have a tendency to balance out, but it proves precisely the point of the answer from the Premier to the Leader of the Opposition’s question that estimates are estimates; they are our best educated guess based on formulae about what will happen in four years’ time. Let me say that the international economy is very, very volatile, so we are doing our best with the estimates, and if members opposite want to ask questions about whether there is a distinction between an estimate and a target that we are trying to hit, please ask because I have had a good look through the budget to see how they met their estimates and whether they hit their targets, and it is not a very attractive scenario.
Mr C.C. PORTER replied: That population growth, as I understand it, is based on statistics from the Australian Bureau of Statistics that are provided to us. That is my understanding, but I will double-check that for the member. Again, we can do several things with budget estimates. We can put together a team of expert analysts and ask them by jury consensus what the exchange rate will be in four years’ time and what the iron ore price will be in four years’ time, or we can adopt consistent methodology from budget to budget based on accurate information about what is the best predictive measure, and that is what we have done. We have used ABS statistics for population data and we have used two formulae with respect to iron ore pricing and with respect to the dollar. The member’s point is: if the dollar does not drop to 74c, is there a significant loss to the state budget? Yes, there is. If the iron ore price does not drop to $US87 per tonne, is there a significant benefit for the Western Australian budget? Yes there is, and I have nominated what that is. Therefore, these things have a tendency to balance out, but it proves precisely the point of the answer from the Premier to the Leader of the Opposition’s question that estimates are estimates; they are our best educated guess based on formulae about what will happen in four years’ time. Let me say that the international economy is very, very volatile, so we are doing our best with the estimates, and if members opposite want to ask questions about whether there is a distinction between an estimate and a target that we are trying to hit, please ask because I have had a good look through the budget to see how they met their estimates and whether they hit their targets, and it is not a very attractive scenario.
That population growth, as I understand it, is based on statistics from the Australian Bureau of Statistics that are provided to us. That is my understanding, but I will double-check that for the member. Again, we can do several things with budget estimates. We can put together a team of expert analysts and ask them by jury consensus what the exchange rate will be in four years’ time and what the iron ore price will be in four years’ time, or we can adopt consistent methodology from budget to budget based on accurate information about what is the best predictive measure, and that is what we have done. We have used ABS statistics for population data and we have used two formulae with respect to iron ore pricing and with respect to the dollar. The member’s point is: if the dollar does not drop to 74c, is there a significant loss to the state budget? Yes, there is. If the iron ore price does not drop to $US87 per tonne, is there a significant benefit for the Western Australian budget? Yes there is, and I have nominated what that is. Therefore, these things have a tendency to balance out, but it proves precisely the point of the answer from the Premier to the Leader of the Opposition’s question that estimates are estimates; they are our best educated guess based on formulae about what will happen in four years’ time. Let me say that the international economy is very, very volatile, so we are doing our best with the estimates, and if members opposite want to ask questions about whether there is a distinction between an estimate and a target that we are trying to hit, please ask because I have had a good look through the budget to see how they met their estimates and whether they hit their targets, and it is not a very attractive scenario.
The member’s point is: if the dollar does not drop to 74c, is there a significant loss to the state budget? Yes, there is. If the iron ore price does not drop to $US87 per tonne, is there a significant benefit for the Western Australian budget? Yes there is, and I have nominated what that is. Therefore, these things have a tendency to balance out, but it proves precisely the point of the answer from the Premier to the Leader of the Opposition’s question that estimates are estimates; they are our best educated guess based on formulae about what will happen in four years’ time. Let me say that the international economy is very, very volatile, so we are doing our best with the estimates, and if members opposite want to ask questions about whether there is a distinction between an estimate and a target that we are trying to hit, please ask because I have had a good look through the budget to see how they met their estimates and whether they hit their targets, and it is not a very attractive scenario.
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