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Resources Sector Remains Major Contributor To WA Economy

The resources sector remains a strong economic contributor to the Western Australian economy with State royalties increasing nearly five-fold since 2004.

The Western Australian Government Mid Year Financial Projections Statement, released today, highlights the importance of the resources sector to the Western Australian economy, with royalties forecast to contribute almost $3.8 billion, or 14.8 per cent of state revenue, for 2015-16.

By comparison, total royalty revenue was $841 million in 2004-05, before the expansion of the sector over recent years.

CME chief executive Reg Howard-Smith said continuing with the Government’s planned asset sale program would provide a much needed injection of capital for the State.

 “The deficit demonstrates the need for the government to focus on policies and reforms to generate growth, improve the ease and reduce the cost of doing business in the state, and enhance productivity to remain attractive to foreign investment,” Mr Howard-Smith said.

 “Despite the current economic situation, CME welcomes the measures put in place by the State Government to reduce expenditure without adversely impacting on industry growth.

 “With Western Australia’s share of the GST predicted to drop to less than 30 per cent, the resources sector is supportive of moves by the WA Treasurer to work with the Australian Government to cap the level of the GST collected that is available for distribution to other states.”

The Mid Year Review showed that falling commodity prices had eroded forecast revenue, with Treasury adapting its forecast iron ore price down to US$42.50/tonne for 2016-17. A bounce has been predicted in the following years, with iron ore forecast to be US$46.30 in 2017-18 and US$50.20/tonne in 2018-19.

“CME considers the responsible and most effective way to increase revenue from the resources sector is to have policies which grow the size of the industry,” Mr Howard-Smith said.

“Initiatives which keep the sector strong and prosperous will be welcomed by the industry as well as the broader Western Australian economy.”