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Western Australia is accustomed to the boom-and-bust cycle of mining, which underpins the state's economy.
But with the price of the state's biggest revenue spinner dropping quicker than expected, should West Australians be worried?
The federal treasurer this week warned plummeting iron ore prices on the back of China's cooling property market could cost the federal government $3 billion in revenue due to reduced tax receipts from iron ore exports.
WA Treasurer Rita Saffioti said the prospect of lowering prices was less than ideal.
"We're not feeling great about that prospect," she told reporters on Monday.
But after years of sky-high iron ore prices which have seen the state's coffers looking healthier than ever, Ms Saffioti said the WA government had budgeted appropriately for what was ahead.
Rita Saffioti says the state government has kept forecasted price estimates conservative. (ABC News: Andrew O'Connor)
"You always have to, in a sense, budget for the worst, because you have to make sure that you're preparing for all scenarios, and that's what we've been doing," she said.
Conservative estimates to buffer blow
Iron ore royalties are the biggest contributor to WA’s budget bottom line, adding about $10 billion last financial year, following similarly high receipts the previous two financial years.
Iron ore prices are down about 38 per cent since the beginning of 2024 and have fallen by 7.5 per cent in the last week alone.
At the start of the year, iron ore prices were around $143 per tonne, but have been gradually declining all year.
But the WA Treasury has been bracing for a decline for some time, basing its current budget on a long-run average price of $US71 per tonne.
Having learnt the lessons from bygone governments, the WA government has for years kept its forecasted price estimates conservative to shield against any price shocks.
"There's always criticism when we release our budgets with very conservative estimates, but having that conservative estimates allow us to buffer from these movements," Ms Saffioti said.
Chamber of Commerce and Industry WA chief economist Aaron Morey said the importance of iron ore could not be understated, but he was confident the state was well positioned to weather a price slump.
Aaron Morey says WA's overall economy is "still really strong". (ABC News: Cason Ho)
"Undoubtedly, the lower those iron ore prices come, the bigger the impact on the budget," he said.
"In coming years, there will be disruption if there is a significant slowdown in China's economy, but overall our economy is still really strong."
The pressure to diversify
For years, state governments have talked about the need to wean off iron ore and "diversify" the WA economy.
Bankwest Curtin Economics Centre research fellow Daniel Kiely said that process could take decades.
Daniel Kiely says economic diversification will not happen overnight. (Supplied)
"Rome wasn't built in a day … It's not just about diversity, diversifying products and services. It's also about looking towards new markets," Dr Kiely said.
According to Dr Keily, iron ore accounts for more than 50 per cent of WA's export value in terms of royalties, and is worth 15 per cent of overall export value nationally.
He said the key to diversifying the mining state's economy was reducing the reliance on a single commodity and export destination.
"With all our eggs in the China basket, so to speak, we see with the iron ore issue, declining prices puts us at a huge risk," he said.
He said investing in processing and manufacturing on Australian shores would be essential to avoiding market-driven price volatility.
Dr Kiely cited the green energy transition as a major opportunity for economic diversification and noted the positive steps governments were already taking on both a federal and state level.
Potential silver lining
Perth builder Jason Janssen said cooling iron ore prices could be a blessing in disguise for WA's housing market.
"You're going to get some workers, that are working up north in the mining sector, come back down and fulfil the trade down here in Perth," he said.
Jason Janssen says WA's housing construction sector could benefit from the iron ore price slump. (ABC News: Rhiannon Shine)
"That means that we're going to be able to build houses quicker, [and] hopefully control the prices a bit more as well.
"When there's a lack of available labour, there's very little control over prices. It's supply-and-demand driven."
Real Estate Institute of WA president Joe White said while house prices were not about to fall off a cliff, the introduction of more labour could take some of the heat out of the market.
"We can move back to a natural pattern of employment, whereby we just haven't got all the attraction to one area," he said.
"Then we can have some of the other needs of society, like construction, civil projects, on roads and things like that, that can have their share of the labour as well.
"I think at the end of the day, it'll probably lead to a more sustainable sort of an economic growth pattern."
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