Western Australia may lose out on $2 billion from raised royalty rates on iron ore miners, under federal treasurer Wayne Swan’s plans to share the resource profits with other states.
The move to end the concession on iron ore fine rates announced by WA treasurer Christian Porter yesterday could cost WA, the Commonwealth Grants Commission (CGC) has warned.
Currently, funds raised in states through major tax increases are shared throughout other parts of Australia and WA Treasury has calculated that of the $2 billion expected from iron ore increase, it will only lost $96 million in the 2014-15 financial year.
But the federal treasurer’s calculations have differed from WA’s, and yesterday Swan was advised yesterday following the budget that the CGC would ultimately all be redistributed to states including Tasmania and South Australia.
The WA government is depending on a review led by former NSW Premier Nick Grenier into the CGC to limit state share of the GST.
The review is unlikely to be signed off before the federal election in August 2013, following the review that isn’t due until late 2012.
Federal Treasurer Wayne Swan described WA’s move on iron ore royalties as the ultimate "own-goal".
He has accused Premier Colin Barnett of damaging some of the state’s newest iron ore operations by selfishly making a grab for cash.
He said the premier should wait for the review to present its recommendations.
Barnett did say WA’s GST would probably not diminish, because of the problematic CGC system and said Swan should not threaten WA, especially considering the mining tax has not been passed into law.
Image: The Chronicle