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Resources – Royalties

Cassy O'Connor MP

Cassy O'Connor MP  -  Tuesday, 7 June 2022

Tags: Treasury

Ms O'CONNOR - Thank you. On the royalty payments, as you're aware, the Government budget papers forecast a decline in royalty payments across the forward Estimates. In fact, quite a substantial decline and return to the people of Tasmania. You know that we argue for an increase in mining royalties to at least bring them up to the national average, because we have the lowest mining royalty rates in the country. Are you able to explain why Tasmanians are getting such a poor return on their resources?

Mr BARNETT - Thank you for the question. I would like to correct some allegations which, on behalf of the Government, we don't agree with. The first relates to having the lowest royalties regimes in Australia. The second is the return for the Tasmanian Government is for and on behalf of the Tasmanian people because that money goes to health, education, and keeping the community safe. It's very important and that's why we support the industry to progress and do well.

With respect to the detail around your question, around royalties, and where we're at in Tasmania in comparison to other states, I would like to pass to the deputy secretary. I also note that you made reference in your question to your alternative budget which actually sets up a super tax on the mining and mineral processing sector which is not appreciated and is not supported by our Government.

Ms O'CONNOR - No. It's not a super tax. It's to bring royalties into line with the national average.

CHAIR - Ms O'Connor, we will be adjourning very shortly, so if you'd like your question answered, I suggest that you stop interjecting.

Mr STEWART - There are a couple of elements to that question so I will attempt to answer both. With respect to the projections in the budget paper, they are very conservative projections and they always are. They are based on a number of highly variable components like commodity prices and exchange rates. Treasury takes a very conservative view so as not to overestimate income. Having said that, the figures for the out-years are still very high when compared to historic averages. That's the explanation around the projections. In terms of our royalties regime, the Tasmanian regime from a policy perspective is attempting to strike a balance between maintaining Tasmania's attractiveness as a location for exploration and mining while also ensuring that the community gets a fair return for Crown-owned commodities.

For this financial year, if we look at a comparison across states, it is a little difficult to make direct comparisons because states have different regimes. But if we look at the royalty return as a percentage of sales value, our return for this financial year will be around about 4 per cent which is an increase from last year. That compares favourably, with say, Victoria which has a flat rate of 2.75 per cent. Western Australia has a different scheme where they levy loyalties at different rates for different commodities. Essentially, if you look at our royalty return as a percentage of sales value, we are pretty much smack bang in the middle of all states, if not slightly higher.