Australia's Economy Assisted By Foreign Disaster, But A Sustainable Strategy Is Still Needed

It's the grim nature of raw economics that when a river of toxic sludge surged down a Brazilian valley killing about 300 people in January, things really looked up for the Australian budget.

The disaster, caused by the collapse of a tailings dam at Vale's iron ore mine, brought a bonanza to Treasury coffers as the Brazilian company's Australian competitors Rio and BHP raked it in.

Iron ore, priced at $72 a tonne at the time of the lethal sludge slide, started steadily increasing as Vale's production slipped, reaching $122 a tonne. It's since dipped to $91 but this is still 65 per cent higher than the $55 a tonne forecast by Treasury for the current financial year.

Now, before your eyes glaze over, just remember this: every $10 over the forecast iron ore price generates a whopping $3.7 billion for the federal budget over the year.