BUDGET’S BRAZILIAN BUTTERFLY BILLIONS

WE are almost literally seeing the Butterfly Effect shower billions of dollars on Josh Frydenberg’s budget and the shareholders of BHP, Rio Tinto and Fortescue.

Now, it hasn’t been literally the case – as ‘the Effect’ has it – of a “Butterfly flapping its wings in Brazil triggering a cyclone off Queensland”.

But it most certainly has

been the case that a dam bursting in Brazil (and a few others threatening to follow) has sent the global iron ore price rocketing – and, more importantly, the price then staying high.

As a consequence, the profits of our big three iron ore miners – and also those of Australia‘s richest woman, Gina Rinehart, who has both a big stake in Rio’s profits and a big mine in her own right – will be much increased.

That in turn has sent the corporate trio’s share prices rocketing – the private Rinehart doesn’t have a share price – and added some billions of dollars to the value of shareholdings.

The consequent big surge in their tax bills – Rinehart is the single biggest individual taxpayer in Australia and indeed is the single biggest taxpayer by a country mile that we have ever had – is the one reason the budget bottom line has improved so dramatically since the midyear update a little over three months ago.

It is the reason why Frydenberg is able to have his budget surplus cake and

still hand out slices for (some of) you to eat.

There’s a lot of (bitter and twisted) irony in the fact that the money to pay pensioners a tokenistic $100 or so towards the multitimes-that-figure increase in their power (and gas) bills – thanks to climate change idiocy – is being paid by China gobbling down our iron ore and coal and pumping CO2 like there’s no tomorrow.

Every $US10 increase in

And furthermore, not only no debt but a

$60 billion (Costelloinitiated) Future Fund which has now grown to nearly $150 billion.

Sadly in contrast, Frydenberg will be handing Bowen not zero debt but around $350 billion of net debt (after accounting the $150 billion in the FF).

So far as the next six or so weeks are concerned, at least treasurer Freydenberg is not replaying the 2016 budget, which also kicked off an election campaign.

The pair of political geniuses in then-PM Malcolm Turnbull and then-treasurer Scott Morrison thought it would be a good idea to kick off the long – long, eight-week – campaign with a budget that bashed their base over superannuation.

We most certainly won’t see any of that tonight.

But instead the nowelevated Morrison thought it would be a good idea to replay that Hillary strategy of bashing the voters you need to win.

That’s of course, President-not Hillary Clinton.

Instead of calling them “deplorables”, Morrison effectively said they were “abhorrent”. Well, at least, he’s not going to repeat his previous exercise of bashing them fiscally.

Incidentally, the surge in Rio’s share price has almost got it back to the spectacular high reached before the GFC – and before its $40 billion Alcan debacle brought everything crashing down.

Now Rio is pushing $100, back then it got to $150.

But taking account of the heavily, heavily dilutive rights issue it had in 2009 – to pay for the Alcan disaster – today’s price is equal to around $140.

It also means the Chinese who bought a big chunk of Rio – to see off BHP, then called BHP Billiton to reflect its own stupidity – at $120 a share are now finally in front.