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The old adage in sport is that it’s better to be lucky than good, and it applies as well to being a treasurer. Regardless of whether or not you consider Peter Costello a good treasurer, he sure as heck was a lot luckier than those who followed him. But now Scott Morrison may himself be about to get lucky.

 

Once the mining boom of the early 2000s kicked into gear, so too did large amounts of revenue – but, importantly, it was unexpected amounts of revenue.

 

Each year, the Treasury makes estimates of how much revenue it will raise, based on certain economic parameters such as employment and wage growth (good for estimating income tax) and the value of the Australian dollar and of the prices of commodities such as iron ore and coal (good for company tax).

During the six years from 2002-03 to 2007-08, the Treasury continually underestimated how much tax it would raise, because it continually underestimated just how much better those parameters would be.

 

For example, purely due to the parameters being better than originally expected, revenue for the 2005-06 budget was $33.7bn more than originally expected, and in the final two years of Peter Costello’s stint as treasurer, the final revenue result finished respectively $50.3bn and $62.5bn better off.

 

And it wasn’t just because the Treasury was being wrong three years in advance.

 

In between Costello delivering his budget speech for the 2006-07 budget and the final result, an extra $26.2bn of unexpected revenue came into the government’s coffers.

 

Think on that.

 

In the space of a year, an extra $26.2bn of revenue was raised, not due to increasing the tax rate or adding new taxes, but purely because things turned out better than was expected.

 

Now that is luck.

 

In the six years from 2002-02 to 2007-08 an extra $188bn in revenue was raised due to the economy and commodity prices performing better than originally anticipated.

 

Then came the global financial crisis.

 

Between Wayne Swan delivering the 2008-09 budget and its final result, purely because the economy slowed, $19.2bn less revenue was raised than expected.

 

And it was not just Swan who was unlucky – Joe Hockey suffered as well.

 

In the seven years from 2009-10 to 2015-16, a total of $196bn revenue was written down because each year the economy kept performing worse than the Treasury thought it would.

 

The main reason was the collapse of iron ore and coal prices. From September 2011 to the end of 2015, the price of iron ore fell 76% and coal by 58%.

 

 

Scott Morrison, however, might find himself rather luckier than Wayne Swan or Joe Hockey.

 

​ A restriction of coal production in China and an improvement in building construction in China ​ has caused an increase in demand for coal at the same time supply has been reduced. This has meant the price for coking coal (used in steel production) from Australia has risen from $93 a tonne for the September quarter to $200 a tonne in the December quarter.

SOurce: The Guardian.com