But that ought to be feasible given that overall income is considerably higher. Of course we cannot know whether the terms of trade will be high for a long period. History certainly would counsel caution in this respect. We do know that supply of various resources is set to increase significantly over the years ahead and not just from Australian sources.
It is for this reason that we assume some fall in commodity prices over the next several years. The assumption underlying the Bank’s forecasts published a few weeks ago is that iron ore prices fall by up to about 30 per cent over the next several years.