Higher royalties will risk jobs and hurt investment in WA

Raising mining royalties would hurt the Western Australian economy rather than improve it, the Chamber of Minerals and Energy of Western Australia (CME) warned ahead of tomorrow’s 2017-18 State Budget.

CME Acting Chief Executive Nicole Roocke said there had been speculation in recent weeks about a possible rise in gold royalties, but said such a move would be disappointing and counterproductive to fixing State debt.

“Given the government is well aware revenues raised from royalties are eventually redistributed to other states through the current GST system, there is no justification for the increase at a time when the industry has lifted,” she said.

“While there has been a number of significant mine expansions for active gold producers and new gold mines under construction, which will drive demand for skilled workers and create job opportunities in this State, the gold price is comparable to what it was two years ago.

“These employment opportunities would be put at risk due to any royalties increase, which could also hurt future investments in the sector and possibly lead to mine closures.”

Ms Roocke said when the previous Liberal government reviewed the mineral royalty rates in 2015, Labor commented at the time any proposed increases to gold royalties would have a negative impact due to the marginal nature of the gold industry.

“Any additional royalty burden on a particular mineral needs to be considered in the wider context of the taxes, rates, levies and other cost pressures currently imposed and what impact it may have on the sector’s international competitiveness,” she said.

“CME considers the government should maintain its focus on internal cost savings, more effective service delivery and economic efficiencies if we are to achieve improvements to the overall condition of the Western Australian economy.

“Imposing additional significant financial burdens on the resources industry which underpins the WA economy is not the answer.”

Ms Roocke pointed out the resources industry had already faced an increase in fees and charges since July 1 2017 as part of a broader push to identify additional revenue to repair the state budget. These included increases in port fees, the Mine Safety Levy and Annual Mining Tenement Rents.

Fact file:

  • Gold production has increased significantly since 2008-09 and has been accompanied by an increase in number of operating gold mines in WA over that time.
  • The gold sector is a significant employer and employs approximately 23% of total WA mining industry workforce – (25,000 people), which is nearly double that of 10 years ago.
  • The gold industry is a significant contributor to WA Government by way of royalties and accounts for about 5% of total resources industry royalties (approximately $238 million).
  • Following further improvements in the Australian dollar gold price, the value of sales reached a record $10 billion in 2015–16, a 10 per cent increase on the 2014–15 value of $9.1 billion.