Premier Colin Barnett and Treasurer Mike Nahan have praised Federal Treasurer Joe Hockey’s decision to request the Commonwealth Grants Commission take account of volatility in mining revenues when assessing GST distribution.
In recent years iron ore royalties have grown from 4 per cent of State revenues to 20 per cent in the 2014-15 State Budget. However, the collapse of the iron ore price since the Budget was delivered in May has wiped $7.1 billion in revenue from the Budget over the forward estimates.
Mr Barnett welcomed Mr Hockey’s acknowledgement that the treatment of GST relativities needed to take into account the volatile mining revenue streams faced by States such as Western Australia.
Under the existing system, GST relativities are calculated on commodity prices measured at three-year intervals, which means Western Australia’s GST return is based on sharply higher iron ore royalties than the State is actually receiving.
Mines and Petroleum Minister Bill Marmion today marked the billionth dollar returned to the mining industry, six months after the launch of Western Australia’s world-first Mining Rehabilitation Fund.
“The fund is a big winner for jobs and the industry during this challenging time for our resources sector,” Mr Marmion said.
“This money was previously tied up in environmental bonds but is now back with companies and helping boost their exploration and mining activities.”
Under the old system, the Department of Mines and Petroleum was holding about $1.2 billion in unconditional performance bonds as security to ensure operators met their rehabilitation requirements following mine closure. The fund has replaced the bond system with a more affordable annual levy.