Mining committee calls for royalty reform for Australia’s regions

A government committee report has recommended a series of steps be taken to ensure mining wealth is more fairly distributed back to regional Australians.

The report, Keep it in the regions: Mining and resources industry support for businesses in regional economies, has suggested the federal government implement ‘Royalties for Regions’-style programs — similar to one in place in Western Australia — that would see mining royalties reinvested across various states and territories.

In 2015-16, the Western Australian Government gave back around 9 per cent of the mineral and petroleum royalties it received from the Pilbara region to the Pilbara region, around $230 million of an overall $2.5 billion.

The Pilbara region accounted for around 55 per cent of the state’s total mining and petroleum royalties of $4.6 billion for the year.

“The committee believes that many regional communities impacted by mining are not getting their fair share of the wealth generated by the resources that are extracted from their regions,” according to the report.

“However, it is very difficult to quantify returns for the regions from mining using the data and resources that are currently available.”

The report suggested governments and researchers work together to collate data more effectively in order to determine how mining wealth is redistributed in various communities.

Since different state departments collect mining data in different ways, and because there is no specific fund for the distribution of royalties in regional communities, it is difficult for governments to quantify mining’s return to regional areas according to the report.

The inquiry also considered the impact of extended payment terms between mining companies and suppliers, suggesting that terms of 60 to 90 days were too long and that lower maximum payment terms be implemented.

Some companies have already responded to such criticism; Anglo American and BHP recently announced maximum payment terms of 30 days, for example, in order to benefit small-to-medium enterprises (SME) and local businesses.

Committee chair and former Deputy Prime Minister Barnaby Joyce believes fly-in, fly-out (FIFO) operations and inadequate local investment in mining towns are particular concerns.

“When workers fly in and fly out the wealth flies out with them,” he said in the report’s foreword.

“When the coal from Moura builds a house on the Gold Coast because that is where the miner lives, then Central Queensland is reduced to merely a hole in the ground. This is neither fair nor tenable.”

Joyce also said Australia “looked with envy” at how oil wealth had benefitted Texas-built cities like Dallas and Houston, while similar levels of coal wealth in Central Queensland had failed to produce a city of the same stature.

“If you take the wealth from mining and build a new airport in Sydney, don’t complain if people just want to move to Sydney,” he continued.