The State Government’s Mid-Year Financial Projections Statement shows WA’s resources sector remains integral to the State economy, making up 20 per cent of state revenue compared to 15 per cent the previous year. Iron ore commodity prices and royalties paid being responsible for a projected $3.7 billion boost the WA’s budget.
The projections, released today by Treasurer Mike Nahan, showed that while iron ore royalties were expected to boost WA’s budget, the sector was still adjusting from the construction boom with 24,700 fewer people employed in mining in August 2016 compared to August 2012, thereby having an impact on payroll tax payments to the State. Importantly employment in the resource sector is more than double what it was 10 years ago. The statement also projects that a change in the number or size of high value commercial transactions, such as transfers of mining tenements also presented budget risks and the downturn in construction in the sector was a contributing fact to WA’s falling Gross State Product.
Chamber of Minerals and Energy Chief Executive, Mr Reg Howard-Smith, said that while doing it tough, the mining sector was still the bright light in WA’s economic future, yet the positive contributions of the sector and its potential growth were put at risk by the WA Nationals’ proposed mining tax.
“While the mining sector is still a major contributor to the State’s economy the government recognises it has been hit hard and is facing difficulties. The iron ore sector has provided a ray of hope for the WA economy in the government’s projections, but if Brendon Grylls’ mining tax is implemented, then those figures are blown out of the water,” Mr Howard-Smith said.
“From a mining sector point of view and, by extension, a WA economy standpoint, the WA Nationals mining tax proposed by Brendon Grylls is the single biggest economic threat WA faces.
“We have seen improvement to the economy off the back off iron ore, yet it is this very sector that the WA Nationals are targeting with a huge new tax and instability that will cost 3,400 WA jobs, harm our GST even further and damage investment.
“The budget deficit demonstrates the need for the government to focus on policies and reforms to generate growth and jobs, improve the ease and reduce the cost of doing business in the state, and enhance productivity to remain attractive to foreign investment.”
Mr Howard-Smith said that while WA’s worsening GST situation, with its ‘relativity’ now forecast to reach 0.661 in 2019-20, down from 0.759 forecast in the 2016-17 Budget, was further bad news for the State, this would be made even worse if the WA Nationals’ mining tax was introduced.
“There is no doubt the current situation is unacceptable and Canberra should give WA its fair share of GST. However, Brendon Grylls’ new mining tax will only make WA’s situation even worse, sending even more of our GST to the eastern states,” he said.
CME welcomed the government’s commitment to asset sales and reiterated its support for the sale of Western Power as well as measures to contain expenditure growth within the public sector.