Experts warn falling iron ore prices will have an impact on everything from taxes to superannuation.
During the resources boom the iron ore price traded above US$100 a tonne steadily for about three years, but last year iron ore slumped 50 per cent with those losses accelerating in the past two months.
Peter McGuire, analyst at FS Securities says, while structural decline in demand is being seen as the growth in Chinese construction projects slows, supply is a bigger issue.
"You've got too many producers, and they're producing at very discounted rates."
Smaller miners are hurting more than their larger counterparts like BHP Billiton and Rio Tinto.
Atlas Iron, Australia's fourth bigger ore producer, went into voluntary suspension earlier this week and is reviewing its options.
It needs an iron ore price above US$70 a tonne to make a decent profit margin.
Iron ore is currently trading at about US$50 a tonne.
Evan Lucas, analyst at IG Markets expects other smaller players will follow Atlas Iron.
"The quality of their iron ore is low, and they're a high cost production unit, and all that is why unfortunately Atlas Iron will not be the last of this story."
The decline in iron ore prices is also having an impact on Australia's terms of trade as noted by the Reserve Bank in its statement following its interest rate decision earlier this week.
The mining sector accounts for three per cent of total Australian jobs, in Western Australia that figure is closer to 10 per cent. The value of iron ore and coal exports represent about 10 per cent of Australia's overall GDP.
However, iron ore revenues have fallen about $1billion since August.
Peter McGuire says the impact on the federal budget will be significant.
"The loss of jobs, company tax revenue, and duties will be far more damaging than the $5 doctors visits. Corporate tax revenues are around $70 billion annually. A hit in corporate tax take will be hard to make up given the country's rather anemic growth profile."
Evan Lucas says there could be land and superannuation tax changes as a result of the lower iron ore price.
