Swan, Barnett clash over royalties promises

West Australian Premier Colin Barnett has denied accusations from Wayne Swan that he is misleading Australians over royalty rises in his budget.

Swan said Barnett has repeatedly rules out such increases.

The Premier said yesterday he had not increased royalties in the state budget announced last week, but rather removed the concession on iron ore “fines” that have been an issue for decades.

Barnett said he had "made it very clear that we were not going to increase royalty rates, and by that I mean the general rates of royalty".

"What I have said is we will progressively remove concessions, and that is what we have done."

He also said the Gillard government assured the state last year that the GST revenue in Western Australia would not be cut if he raised iron ore royalties.

But Swan’s office says the assurances given to the state in a letter from WA Under Treasurer Tim Marney to the former Treasury secretary Ken Henry were a separate issues, regarding a separate increase in iron ore royalties paid by mining giants BHP Billiton and Rio Tinto last year.

Last week, the federal government threatened to cut GST and infrastructure funding to the state, claiming it is serving its “own goal”.

The state stands to lose out on $2 billion from raised royalty rates on iron ore miners, Swan’s plans to share the resource profits with other states.

Previously, business groups called on Treasurer Christian Porter to make cutting payroll tax his top priority to increase job creation.

It said that under the Commonwealth Grants Commission rules, Australia’s biggest mining state will probably end up with less revenue.

In a letter to the federal treasury dated May 10, 2010, Marney states the government’s intention of removing the royalty concession on iron ore fines and seeks assurance from the Gillard government that it would direct the CGC not to reclassify iron ore “fines” from a low to high-grade mineral.

He said if the mineral was reclassified, it would reduce the state’s “GST by more than the additional; royalty revenue we would collect.”
The letter was released under freedom of information (FOI) laws, and the following paragraph of the letter available has the following paragraph blanked out.

Another version of the document shows the content of the paragraph, which says the issues with reclassifying iron ore “fines” had been raised in correspondence between the former WA Treasurer Troy Buswell and the federal Treasurer prior to meetings in March 2010.

Further, it says it was raised at the Treasury meeting, “"where assurances were given that the commonwealth would ‘direct’ the Grants Commission on this matter".

Yesterday Barnett was adamant the federal government had told WA its GST share would not be decreased.

"Yes, but I don’t, in a sense, try to hold Wayne Swan to the discussions that took place," he told reporters.

"But I am very clear in my knowledge of what I have said to the federal government at various stages."

Image: WA Today

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