Australia to profit from war pushing up prices, Westpac says

[CANBERRA] Australia will likely gain an unexpected multi-billion dollar windfall from the Iran war, as higher coal and gas export prices boost revenues over the five years to 2030, according to Westpac Banking Corp.

The national budget will get about A$20 billion (S$17.6 billion) more revenue over that period, senior economist Pat Bustamante wrote in a report on Tuesday (Mar 31). And the jump in gold prices since 2024 is estimated to add another A$19 billion to the government’s coffers over the next five years.

“Higher commodity prices and elevated inflation are lifting Treasury tax collections,” Bustamante wrote. “Because the tax system operates in the nominal world, tax receipts can continue to rise even as real economic activity slows over the coming years, as we expect.”

The national budget is due in May and the government’s updated commodity assumptions and revenue forecasts will be closely watched, as that will affect Prime Minister Anthony Albanese’s attempts to reduce the deficit. Using spot prices and its commodity forecasts, Westpac’s Bustamante estimated that the higher-than-assumed prices will deliver a windfall of almost A$60 billion over the five years to fiscal 2030, with about a third of that directly tied to the current conflict.

The gains are expected to more than offset the estimated A$2.6 billion cost of a temporary cut to a fuel tax which was announced this week, leaving a net improvement in the budget position in the near term, he wrote.

The windfall comes after Australia’s 2025 trade surplus shrank to the lowest since 2018 due to a decline in shipments to China, its largest trading partner. Australia’s broader economy is also on shaky footing, with UBS AG predicting a period of “stagflation” led by higher borrowing costs and renewed inflationary pressures.

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“Gold is also delivering an underappreciated windfall,” Bustamante wrote, noting the yellow metal is poised to become Australia’s second‑largest export by value in the fiscal year ending in June, overtaking liquefied natural gas and coal. “We expect some of this revenue uplift to materialise as early as May 2026, when miners make large wash‑up tax payments for the completed 2025 tax year,” he wrote.

The boost highlights how inflation and a cyclical upswing in the prices of commodities are boosting tax income, with recent data showing it running ahead of official projections. Still, “the budget remains deeply in deficit,” and that shortfall is worse than almost any year since 1998, Bustamante wrote. BLOOMBERG