Prime Minister Malcolm Turnbull’s condemnation of the WA Nationals’ proposed mining tax has been welcomed by the resources sector.
Nationals WA leader Brendon Grylls has targeted two of Western Australia’s biggest economic contributors and employers through proposing to raise part of the royalty rate for BHP Billiton and Rio Tinto by increasing the mining lease rental fee from 25c per tonne to $5 per tonne.
Currently all iron ore producers pay to the State a royalty of 7.5 per cent of the value of each tonne of iron ore. In addition to the royalty payment, all iron ore producers big and small are also obliged to pay a 25 cent per tonne additional rental payment 15 years after mining commences.
Using recent prices of $60 per tonne of iron ore the royalty paid to the State Government, including the mining lease rental, currently equates to $4.75 per tonne. But under Mr Grylls’ proposal, the rate would more than double to $9.50 per tonne.
That royalty fee is paid on top of other costs including company tax, payroll tax, local government rates, freight, interest on borrowings and capital costs.
CME chief executive Reg Howard-Smith said Mr Turnbull appreciated the impost a new mining tax would have on Western Australia.
“Mr Turnbull knows, as do many of his parliamentary colleagues, that a selective tax on two of WA’s biggest economic contributors would severely impact on jobs and investment in WA,” Mr Howard-Smith said.
“The longer Mr Grylls talks about this tax, the more holes appear in his plan. This is a bad policy which will only have negative impacts on WA’s international standing as a safe haven for resources investment.
“Mr Grylls is purely acting out of his own political interests and not for the good of Western Australia.”
