As the Hunter valley has generated around 15% of the Mineral Resources Tax revenues, it should be entitled to a similar amount of funding, Muswellbrook mayor Martin Rush has demanded.
He explained that as Queensland and WA have already been put first in the initial rounds of infrastructure funding it was time NSW received its share, the Newcastle Herald reports.
However, he voiced his concern that the threats from the Federal Government over state royalty increases may endanger funding.
According to NSW treasurer Mike Baird, Swan wrote to him stating that another royalty rise, like that carried out in September, may compel the Government to enforce financial sanctions on the state – such as holding back infrastructure funding.
Baird and O’Farrell argue the rise is necessary to offset the cost of the carbon tax, which they estimate will cost the state $950 million over the next four years.
"We are clearly disappointed by what [Swan’s] letter is asking NSW to absorb, which is a financial hit," Baird told ABC radio.
"As part of the mining tax what you have is a promise from the federal government that they will spend over about 11 years $6 billion in infrastructure around supporting those communities that facilitate mining."
Royalties in NSW currently range from 6.2 per cent for deep underground coal to 8.2 per cent for open-cut coal.
The NSW State Government said the size of the latest increase will be negotiated with miners once legislation is finalised later this year.
NSW Minerals Council also raised its concerns over the Federal threats.
NSWMC acting head Sue-Ern Tan stated that close to half of black coal MRRT revenues were generated by NSW, with the majority of it from the Hunter Valley.
"This state is crying out for infrastructure spending, but the people of NSW and the state’s mining industry could end up as collateral damage if this tussle isn’t resolved," Tan said.
"The federal government must ensure that mining communities in NSW get their fair share of [resources tax] infrastructure funding regardless of any political disagreements with the state government."