Australian Treasurer Scott Morrison has included the higher prices for commodities in this financial year budget (in the update today)

But not for future years:

  • "In recent years, Budget and mid-year update forecasts have used an assumption that commodity prices would remain around a recent average over the forecast period
  • "In light of the current exceptional circumstances for bulk commodities, this assumption is not considered prudent at this time. An alternative assumption of a phased reduction in prices from recent levels has been adopted for metallurgical coal and iron ore."

For coal:

  • Uses US$200 per tonne (fob) but falling through Q3 and Q4 of 2017 to US$120 per tonne in the March quarter 2018
  • Iron ore price assumed to drop to US$55/tonne for Q3 of 2017