WA Today reported that an unexpected surge in the global iron ore price has put the budget surplus back within reach.

 

Mr Wayne Swan deputy prime minister of Australia, abandoned his commitment to a budget surplus late last month, the iron ore price had climbed from a September low of USD 86 a tonne to USD 135 a tonne when the Treasurer,. It has since risen to USD 158 a tonne.

 

Forecasters from Deutsche Bank are expecting the price to hit 170 a tonne within weeks. If sustained, the near doubling of the iron ore price would boost company tax revenues and lead to a surge in mining tax payments, putting government revenue back to near what was forecast in the budget.

 

In abandoning his commitment to a surplus, Mr Swan stressed he was only doing so because revenues had collapsed. He would continue to restrain spending so that if they recovered a surplus would still be possible.

 

Mr Swan wrote to ministers after Christmas asking them to find spending cuts in order to fund new priorities. Although the letter did not mention the priorities by name they include the multibillion dollar National Disability Insurance Scheme and Gonski education reforms.

 

The Treasurer recommitted himself to the spending measures in his weekly economic note on Sunday, saying the goal of having Australian schools back in the top 5 schooling systems in the world by 2025 was "ambitious but essential to ensure our future economic success".

 

He said that "We will launch the first stage of the National Disability Insurance Scheme in 2013, one of the biggest social reforms our country has seen. For too long, successive governments have shunned the opportunity to reform disability services, leaving people with a significant, permanent disability and their families behind. That's the purpose of a strong, resilient economy to put in place reforms that ensure we're taking everyone with us."

 

Another priority might be an increase in the USD 35 a day Newstart allowance, now acknowledged by politicians from all sides of Parliament to be too low to live on.

 

According to a costing prepared for the Greens by the Parliamentary Budget Office, lifting the allowance by USD 50 a week would cost USD 2 billion a year.