The Western Australian Government’s hopes of introducing a higher gold royalty rate in the state have again hit a dead end.
WA Treasurer Ben Wyatt yesterday announced a new gold royalty proposal to replace its previous plan, which was blocked by the state’s opposition last month.
The new royalty was proposed to deliver the same tiered rate, an increase from 2.5 per cent to 3.75 per cent, but would only apply when the gold price was above $1400 an ounce, instead of the previously planned $1200 an ounce.
If approved, the royalty hike would have raised $332 million for the WA Government’s so-called budget repair from January next year.
However, the mining industry and the state opposition almost immediately dismissed the new proposal after it was announced.
The WA Chamber of Minerals and Energy (CME) and the Association of Mining and Exploration Companies (AMEC) strongly opposed the proposed increase in the gold royalty rate, saying the “new” proposal was no more than a re-packaged version of the original.
AMEC CEO Warren Pearce said the increase still puts at risk, new and existing projects, jobs in the gold mining industry, and supporting services such as exploration and drilling.
“And it does absolutely nothing to address the fact that approximately 60 per cent of the revenue collected will be sent to the eastern states, via GST distribution,” Pearce said.
The new proposal did attempt to rectify the criticisms of the previous hike that was proposed. For example, the plan reinstated the 2500-ounce royalty free threshold for all gold producers.
It also included an assistance package for an expected nine marginal gold mines that would refund any increased royalty they had to pay.
However, CME CEO Reg Howard-Smith said there had to be a better solution to the WA Government’s debt problem.
“We acknowledge the financial position the state government faces, and agree that everyone needs to share the burden,” Howard-Smith said.
“However, a gold royalty increase is not the answer as it would just threaten jobs, affect local communities, and impact the growth of WA’s economy – all counterproductive measures when you are trying to repair the state’s finances.”
Meanwhile, WA opposition leader Mike Nahan reinforced that the Liberal Party would not be supporting an increase in the gold royalty.
“He (WA Premier Mark McGowan) has not put this package to industry, he doesn’t have the data on it and … the increase in gold royalty will destroy jobs,” Nahan said.