❓ A parliamentary question regarding Western Australia's mining royalty rates, specifically questioning the Premier's statement about a 10% rate and whether there are plans to increase rates. The Minister clarifies the royalty system and defends it against federal government proposals.
AnsweredQoN 1033Legislative Council
QuestionView source ↗
MINING ROYALTY RATES
I refer to the comments the Premier made today on 6PR radio when he stated that the Western Australian mining royalty regime was based on 10 per cent of the value of the mineral in the ground. (1) Is this correct? (2) Is not the standard royalty rate 7.5 per cent? (3) Is there a government plan to increase royalty rates to 10 per cent? Hon NORMAN MOORE
I refer to the comments the Premier made today on 6PR radio when he stated that the Western Australian mining royalty regime was based on 10 per cent of the value of the mineral in the ground. (1) Is this correct? (2) Is not the standard royalty rate 7.5 per cent? (3) Is there a government plan to increase royalty rates to 10 per cent? Hon NORMAN MOORE
AnswerView source ↗
(1)–(3) I am surprised that the member would ask that question because he has been in government and I thought he would know that the royalty rate system that applies in Western Australia has been around for a very long time. The fundamental principle of our royalty system is that it is not profit-based. It is in fact a charge. It is not a tax; it is a charge by the state of Western Australia on behalf of its citizens for the minerals, oil and gas that companies use. The fundamental principle of the royalty rates system is that it is 10 per cent of the wellhead or mine head value of the mineral. However, if value is added to the mineral, the royalty rate reduces because the intention is always to obtain about 10 per cent of the mine head value. I will talk about mining, as opposed to oil and gas, which is slightly different. For example, when iron ore is in the ground at the mine head, we are looking at 10 per cent of its value as the fundamental basis for the royalty rate system. When it is dug out of the ground, crushed, screened and put onto a boat, it attracts a royalty rate of 7.5 per cent. If it is then made into a concentrate, as with magnetite iron ore, it has a royalty rate of five per cent. If it is eventually turned into a metal, the royalty rate is 2.5 per cent. The royalty rate system is based on the value of the mineral in the ground at the mine head being 10 per cent, and the rate reduces as the value of the mineral increases so that the return remains roughly constant. However, because of varying price movements for particular minerals and the cost of production and so on, it will not always return 10 per cent for every mineral, but that is the fundamental principle of the royalty system. The member asked whether we have any intention of raising royalty rates, and the answer is no. Until now, we have removed some concessions in the royalty rate system for iron ore fines. We did that in two tranches by amendments to the state agreement acts that affect BHP Billiton and Rio Tinto. Legislation in the other house, which I cannot talk about, removes a further concession and puts in place a royalty rate of 7.5 per cent for iron ore fines, which is equivalent to the royalty rate for the hematite crushed lump ore that is exported, having gone through that process. There is no change in the royalty rates, and the Premier is quite right. That is the basis on which the royalty rates system works in Western Australia. In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
(1) Is this correct? (2) Is not the standard royalty rate 7.5 per cent? (3) Is there a government plan to increase royalty rates to 10 per cent? Hon NORMAN MOORE replied: (1)–(3) I am surprised that the member would ask that question because he has been in government and I thought he would know that the royalty rate system that applies in Western Australia has been around for a very long time. The fundamental principle of our royalty system is that it is not profit-based. It is in fact a charge. It is not a tax; it is a charge by the state of Western Australia on behalf of its citizens for the minerals, oil and gas that companies use. The fundamental principle of the royalty rates system is that it is 10 per cent of the wellhead or mine head value of the mineral. However, if value is added to the mineral, the royalty rate reduces because the intention is always to obtain about 10 per cent of the mine head value. I will talk about mining, as opposed to oil and gas, which is slightly different. For example, when iron ore is in the ground at the mine head, we are looking at 10 per cent of its value as the fundamental basis for the royalty rate system. When it is dug out of the ground, crushed, screened and put onto a boat, it attracts a royalty rate of 7.5 per cent. If it is then made into a concentrate, as with magnetite iron ore, it has a royalty rate of five per cent. If it is eventually turned into a metal, the royalty rate is 2.5 per cent. The royalty rate system is based on the value of the mineral in the ground at the mine head being 10 per cent, and the rate reduces as the value of the mineral increases so that the return remains roughly constant. However, because of varying price movements for particular minerals and the cost of production and so on, it will not always return 10 per cent for every mineral, but that is the fundamental principle of the royalty system. The member asked whether we have any intention of raising royalty rates, and the answer is no. Until now, we have removed some concessions in the royalty rate system for iron ore fines. We did that in two tranches by amendments to the state agreement acts that affect BHP Billiton and Rio Tinto. Legislation in the other house, which I cannot talk about, removes a further concession and puts in place a royalty rate of 7.5 per cent for iron ore fines, which is equivalent to the royalty rate for the hematite crushed lump ore that is exported, having gone through that process. There is no change in the royalty rates, and the Premier is quite right. That is the basis on which the royalty rates system works in Western Australia. In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
(2) Is not the standard royalty rate 7.5 per cent? (3) Is there a government plan to increase royalty rates to 10 per cent? Hon NORMAN MOORE replied: (1)–(3) I am surprised that the member would ask that question because he has been in government and I thought he would know that the royalty rate system that applies in Western Australia has been around for a very long time. The fundamental principle of our royalty system is that it is not profit-based. It is in fact a charge. It is not a tax; it is a charge by the state of Western Australia on behalf of its citizens for the minerals, oil and gas that companies use. The fundamental principle of the royalty rates system is that it is 10 per cent of the wellhead or mine head value of the mineral. However, if value is added to the mineral, the royalty rate reduces because the intention is always to obtain about 10 per cent of the mine head value. I will talk about mining, as opposed to oil and gas, which is slightly different. For example, when iron ore is in the ground at the mine head, we are looking at 10 per cent of its value as the fundamental basis for the royalty rate system. When it is dug out of the ground, crushed, screened and put onto a boat, it attracts a royalty rate of 7.5 per cent. If it is then made into a concentrate, as with magnetite iron ore, it has a royalty rate of five per cent. If it is eventually turned into a metal, the royalty rate is 2.5 per cent. The royalty rate system is based on the value of the mineral in the ground at the mine head being 10 per cent, and the rate reduces as the value of the mineral increases so that the return remains roughly constant. However, because of varying price movements for particular minerals and the cost of production and so on, it will not always return 10 per cent for every mineral, but that is the fundamental principle of the royalty system. The member asked whether we have any intention of raising royalty rates, and the answer is no. Until now, we have removed some concessions in the royalty rate system for iron ore fines. We did that in two tranches by amendments to the state agreement acts that affect BHP Billiton and Rio Tinto. Legislation in the other house, which I cannot talk about, removes a further concession and puts in place a royalty rate of 7.5 per cent for iron ore fines, which is equivalent to the royalty rate for the hematite crushed lump ore that is exported, having gone through that process. There is no change in the royalty rates, and the Premier is quite right. That is the basis on which the royalty rates system works in Western Australia. In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
(3) Is there a government plan to increase royalty rates to 10 per cent? Hon NORMAN MOORE replied: (1)–(3) I am surprised that the member would ask that question because he has been in government and I thought he would know that the royalty rate system that applies in Western Australia has been around for a very long time. The fundamental principle of our royalty system is that it is not profit-based. It is in fact a charge. It is not a tax; it is a charge by the state of Western Australia on behalf of its citizens for the minerals, oil and gas that companies use. The fundamental principle of the royalty rates system is that it is 10 per cent of the wellhead or mine head value of the mineral. However, if value is added to the mineral, the royalty rate reduces because the intention is always to obtain about 10 per cent of the mine head value. I will talk about mining, as opposed to oil and gas, which is slightly different. For example, when iron ore is in the ground at the mine head, we are looking at 10 per cent of its value as the fundamental basis for the royalty rate system. When it is dug out of the ground, crushed, screened and put onto a boat, it attracts a royalty rate of 7.5 per cent. If it is then made into a concentrate, as with magnetite iron ore, it has a royalty rate of five per cent. If it is eventually turned into a metal, the royalty rate is 2.5 per cent. The royalty rate system is based on the value of the mineral in the ground at the mine head being 10 per cent, and the rate reduces as the value of the mineral increases so that the return remains roughly constant. However, because of varying price movements for particular minerals and the cost of production and so on, it will not always return 10 per cent for every mineral, but that is the fundamental principle of the royalty system. The member asked whether we have any intention of raising royalty rates, and the answer is no. Until now, we have removed some concessions in the royalty rate system for iron ore fines. We did that in two tranches by amendments to the state agreement acts that affect BHP Billiton and Rio Tinto. Legislation in the other house, which I cannot talk about, removes a further concession and puts in place a royalty rate of 7.5 per cent for iron ore fines, which is equivalent to the royalty rate for the hematite crushed lump ore that is exported, having gone through that process. There is no change in the royalty rates, and the Premier is quite right. That is the basis on which the royalty rates system works in Western Australia. In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
Hon NORMAN MOORE replied: (1)–(3) I am surprised that the member would ask that question because he has been in government and I thought he would know that the royalty rate system that applies in Western Australia has been around for a very long time. The fundamental principle of our royalty system is that it is not profit-based. It is in fact a charge. It is not a tax; it is a charge by the state of Western Australia on behalf of its citizens for the minerals, oil and gas that companies use. The fundamental principle of the royalty rates system is that it is 10 per cent of the wellhead or mine head value of the mineral. However, if value is added to the mineral, the royalty rate reduces because the intention is always to obtain about 10 per cent of the mine head value. I will talk about mining, as opposed to oil and gas, which is slightly different. For example, when iron ore is in the ground at the mine head, we are looking at 10 per cent of its value as the fundamental basis for the royalty rate system. When it is dug out of the ground, crushed, screened and put onto a boat, it attracts a royalty rate of 7.5 per cent. If it is then made into a concentrate, as with magnetite iron ore, it has a royalty rate of five per cent. If it is eventually turned into a metal, the royalty rate is 2.5 per cent. The royalty rate system is based on the value of the mineral in the ground at the mine head being 10 per cent, and the rate reduces as the value of the mineral increases so that the return remains roughly constant. However, because of varying price movements for particular minerals and the cost of production and so on, it will not always return 10 per cent for every mineral, but that is the fundamental principle of the royalty system. The member asked whether we have any intention of raising royalty rates, and the answer is no. Until now, we have removed some concessions in the royalty rate system for iron ore fines. We did that in two tranches by amendments to the state agreement acts that affect BHP Billiton and Rio Tinto. Legislation in the other house, which I cannot talk about, removes a further concession and puts in place a royalty rate of 7.5 per cent for iron ore fines, which is equivalent to the royalty rate for the hematite crushed lump ore that is exported, having gone through that process. There is no change in the royalty rates, and the Premier is quite right. That is the basis on which the royalty rates system works in Western Australia. In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
(1)–(3) I am surprised that the member would ask that question because he has been in government and I thought he would know that the royalty rate system that applies in Western Australia has been around for a very long time. The fundamental principle of our royalty system is that it is not profit-based. It is in fact a charge. It is not a tax; it is a charge by the state of Western Australia on behalf of its citizens for the minerals, oil and gas that companies use. The fundamental principle of the royalty rates system is that it is 10 per cent of the wellhead or mine head value of the mineral. However, if value is added to the mineral, the royalty rate reduces because the intention is always to obtain about 10 per cent of the mine head value. I will talk about mining, as opposed to oil and gas, which is slightly different. For example, when iron ore is in the ground at the mine head, we are looking at 10 per cent of its value as the fundamental basis for the royalty rate system. When it is dug out of the ground, crushed, screened and put onto a boat, it attracts a royalty rate of 7.5 per cent. If it is then made into a concentrate, as with magnetite iron ore, it has a royalty rate of five per cent. If it is eventually turned into a metal, the royalty rate is 2.5 per cent. The royalty rate system is based on the value of the mineral in the ground at the mine head being 10 per cent, and the rate reduces as the value of the mineral increases so that the return remains roughly constant. However, because of varying price movements for particular minerals and the cost of production and so on, it will not always return 10 per cent for every mineral, but that is the fundamental principle of the royalty system. The member asked whether we have any intention of raising royalty rates, and the answer is no. Until now, we have removed some concessions in the royalty rate system for iron ore fines. We did that in two tranches by amendments to the state agreement acts that affect BHP Billiton and Rio Tinto. Legislation in the other house, which I cannot talk about, removes a further concession and puts in place a royalty rate of 7.5 per cent for iron ore fines, which is equivalent to the royalty rate for the hematite crushed lump ore that is exported, having gone through that process. There is no change in the royalty rates, and the Premier is quite right. That is the basis on which the royalty rates system works in Western Australia. In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
(1) Is this correct? (2) Is not the standard royalty rate 7.5 per cent? (3) Is there a government plan to increase royalty rates to 10 per cent? Hon NORMAN MOORE replied: (1)–(3) I am surprised that the member would ask that question because he has been in government and I thought he would know that the royalty rate system that applies in Western Australia has been around for a very long time. The fundamental principle of our royalty system is that it is not profit-based. It is in fact a charge. It is not a tax; it is a charge by the state of Western Australia on behalf of its citizens for the minerals, oil and gas that companies use. The fundamental principle of the royalty rates system is that it is 10 per cent of the wellhead or mine head value of the mineral. However, if value is added to the mineral, the royalty rate reduces because the intention is always to obtain about 10 per cent of the mine head value. I will talk about mining, as opposed to oil and gas, which is slightly different. For example, when iron ore is in the ground at the mine head, we are looking at 10 per cent of its value as the fundamental basis for the royalty rate system. When it is dug out of the ground, crushed, screened and put onto a boat, it attracts a royalty rate of 7.5 per cent. If it is then made into a concentrate, as with magnetite iron ore, it has a royalty rate of five per cent. If it is eventually turned into a metal, the royalty rate is 2.5 per cent. The royalty rate system is based on the value of the mineral in the ground at the mine head being 10 per cent, and the rate reduces as the value of the mineral increases so that the return remains roughly constant. However, because of varying price movements for particular minerals and the cost of production and so on, it will not always return 10 per cent for every mineral, but that is the fundamental principle of the royalty system. The member asked whether we have any intention of raising royalty rates, and the answer is no. Until now, we have removed some concessions in the royalty rate system for iron ore fines. We did that in two tranches by amendments to the state agreement acts that affect BHP Billiton and Rio Tinto. Legislation in the other house, which I cannot talk about, removes a further concession and puts in place a royalty rate of 7.5 per cent for iron ore fines, which is equivalent to the royalty rate for the hematite crushed lump ore that is exported, having gone through that process. There is no change in the royalty rates, and the Premier is quite right. That is the basis on which the royalty rates system works in Western Australia. In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
(2) Is not the standard royalty rate 7.5 per cent? (3) Is there a government plan to increase royalty rates to 10 per cent? Hon NORMAN MOORE replied: (1)–(3) I am surprised that the member would ask that question because he has been in government and I thought he would know that the royalty rate system that applies in Western Australia has been around for a very long time. The fundamental principle of our royalty system is that it is not profit-based. It is in fact a charge. It is not a tax; it is a charge by the state of Western Australia on behalf of its citizens for the minerals, oil and gas that companies use. The fundamental principle of the royalty rates system is that it is 10 per cent of the wellhead or mine head value of the mineral. However, if value is added to the mineral, the royalty rate reduces because the intention is always to obtain about 10 per cent of the mine head value. I will talk about mining, as opposed to oil and gas, which is slightly different. For example, when iron ore is in the ground at the mine head, we are looking at 10 per cent of its value as the fundamental basis for the royalty rate system. When it is dug out of the ground, crushed, screened and put onto a boat, it attracts a royalty rate of 7.5 per cent. If it is then made into a concentrate, as with magnetite iron ore, it has a royalty rate of five per cent. If it is eventually turned into a metal, the royalty rate is 2.5 per cent. The royalty rate system is based on the value of the mineral in the ground at the mine head being 10 per cent, and the rate reduces as the value of the mineral increases so that the return remains roughly constant. However, because of varying price movements for particular minerals and the cost of production and so on, it will not always return 10 per cent for every mineral, but that is the fundamental principle of the royalty system. The member asked whether we have any intention of raising royalty rates, and the answer is no. Until now, we have removed some concessions in the royalty rate system for iron ore fines. We did that in two tranches by amendments to the state agreement acts that affect BHP Billiton and Rio Tinto. Legislation in the other house, which I cannot talk about, removes a further concession and puts in place a royalty rate of 7.5 per cent for iron ore fines, which is equivalent to the royalty rate for the hematite crushed lump ore that is exported, having gone through that process. There is no change in the royalty rates, and the Premier is quite right. That is the basis on which the royalty rates system works in Western Australia. In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
(3) Is there a government plan to increase royalty rates to 10 per cent? Hon NORMAN MOORE replied: (1)–(3) I am surprised that the member would ask that question because he has been in government and I thought he would know that the royalty rate system that applies in Western Australia has been around for a very long time. The fundamental principle of our royalty system is that it is not profit-based. It is in fact a charge. It is not a tax; it is a charge by the state of Western Australia on behalf of its citizens for the minerals, oil and gas that companies use. The fundamental principle of the royalty rates system is that it is 10 per cent of the wellhead or mine head value of the mineral. However, if value is added to the mineral, the royalty rate reduces because the intention is always to obtain about 10 per cent of the mine head value. I will talk about mining, as opposed to oil and gas, which is slightly different. For example, when iron ore is in the ground at the mine head, we are looking at 10 per cent of its value as the fundamental basis for the royalty rate system. When it is dug out of the ground, crushed, screened and put onto a boat, it attracts a royalty rate of 7.5 per cent. If it is then made into a concentrate, as with magnetite iron ore, it has a royalty rate of five per cent. If it is eventually turned into a metal, the royalty rate is 2.5 per cent. The royalty rate system is based on the value of the mineral in the ground at the mine head being 10 per cent, and the rate reduces as the value of the mineral increases so that the return remains roughly constant. However, because of varying price movements for particular minerals and the cost of production and so on, it will not always return 10 per cent for every mineral, but that is the fundamental principle of the royalty system. The member asked whether we have any intention of raising royalty rates, and the answer is no. Until now, we have removed some concessions in the royalty rate system for iron ore fines. We did that in two tranches by amendments to the state agreement acts that affect BHP Billiton and Rio Tinto. Legislation in the other house, which I cannot talk about, removes a further concession and puts in place a royalty rate of 7.5 per cent for iron ore fines, which is equivalent to the royalty rate for the hematite crushed lump ore that is exported, having gone through that process. There is no change in the royalty rates, and the Premier is quite right. That is the basis on which the royalty rates system works in Western Australia. In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
Hon NORMAN MOORE replied: (1)–(3) I am surprised that the member would ask that question because he has been in government and I thought he would know that the royalty rate system that applies in Western Australia has been around for a very long time. The fundamental principle of our royalty system is that it is not profit-based. It is in fact a charge. It is not a tax; it is a charge by the state of Western Australia on behalf of its citizens for the minerals, oil and gas that companies use. The fundamental principle of the royalty rates system is that it is 10 per cent of the wellhead or mine head value of the mineral. However, if value is added to the mineral, the royalty rate reduces because the intention is always to obtain about 10 per cent of the mine head value. I will talk about mining, as opposed to oil and gas, which is slightly different. For example, when iron ore is in the ground at the mine head, we are looking at 10 per cent of its value as the fundamental basis for the royalty rate system. When it is dug out of the ground, crushed, screened and put onto a boat, it attracts a royalty rate of 7.5 per cent. If it is then made into a concentrate, as with magnetite iron ore, it has a royalty rate of five per cent. If it is eventually turned into a metal, the royalty rate is 2.5 per cent. The royalty rate system is based on the value of the mineral in the ground at the mine head being 10 per cent, and the rate reduces as the value of the mineral increases so that the return remains roughly constant. However, because of varying price movements for particular minerals and the cost of production and so on, it will not always return 10 per cent for every mineral, but that is the fundamental principle of the royalty system. The member asked whether we have any intention of raising royalty rates, and the answer is no. Until now, we have removed some concessions in the royalty rate system for iron ore fines. We did that in two tranches by amendments to the state agreement acts that affect BHP Billiton and Rio Tinto. Legislation in the other house, which I cannot talk about, removes a further concession and puts in place a royalty rate of 7.5 per cent for iron ore fines, which is equivalent to the royalty rate for the hematite crushed lump ore that is exported, having gone through that process. There is no change in the royalty rates, and the Premier is quite right. That is the basis on which the royalty rates system works in Western Australia. In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
(1)–(3) I am surprised that the member would ask that question because he has been in government and I thought he would know that the royalty rate system that applies in Western Australia has been around for a very long time. The fundamental principle of our royalty system is that it is not profit-based. It is in fact a charge. It is not a tax; it is a charge by the state of Western Australia on behalf of its citizens for the minerals, oil and gas that companies use. The fundamental principle of the royalty rates system is that it is 10 per cent of the wellhead or mine head value of the mineral. However, if value is added to the mineral, the royalty rate reduces because the intention is always to obtain about 10 per cent of the mine head value. I will talk about mining, as opposed to oil and gas, which is slightly different. For example, when iron ore is in the ground at the mine head, we are looking at 10 per cent of its value as the fundamental basis for the royalty rate system. When it is dug out of the ground, crushed, screened and put onto a boat, it attracts a royalty rate of 7.5 per cent. If it is then made into a concentrate, as with magnetite iron ore, it has a royalty rate of five per cent. If it is eventually turned into a metal, the royalty rate is 2.5 per cent. The royalty rate system is based on the value of the mineral in the ground at the mine head being 10 per cent, and the rate reduces as the value of the mineral increases so that the return remains roughly constant. However, because of varying price movements for particular minerals and the cost of production and so on, it will not always return 10 per cent for every mineral, but that is the fundamental principle of the royalty system. The member asked whether we have any intention of raising royalty rates, and the answer is no. Until now, we have removed some concessions in the royalty rate system for iron ore fines. We did that in two tranches by amendments to the state agreement acts that affect BHP Billiton and Rio Tinto. Legislation in the other house, which I cannot talk about, removes a further concession and puts in place a royalty rate of 7.5 per cent for iron ore fines, which is equivalent to the royalty rate for the hematite crushed lump ore that is exported, having gone through that process. There is no change in the royalty rates, and the Premier is quite right. That is the basis on which the royalty rates system works in Western Australia. In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
In the context of today’s national debate, the minerals belong to the people of Western Australia; they do not belong to the people of Australia. The minerals in the ground in Western Australia belong to the people of Western Australia and are managed by the government, and the government charges mining companies a royalty to access those minerals. The Henry review says that this is an inefficient tax because it is not based on profit; but it is not a tax, it is a charge. That is a good thing because we actually get paid for the minerals that we own when the companies use them. If it was a profit-based royalty system, like that which operates in the Northern Territory, we would not get any money until the company made a profit, and some companies never make a profit, albeit they operate for many, many years. In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
In my view, our system is as good a system as we can get. I do not understand how the federal Treasurer and someone as knowledgeable and with as good an understanding as Ken Henry could misunderstand what royalties are in Western Australia, which they clearly have. They have their avaricious eyes on Western Australia’s royalties because they would like to replace that system with a minerals resource rent tax that would go to the commonwealth government and exclude us from the process. To suggest that we should be penalised if we raised our royalty rates—in other words, charged mining companies more so that we would have more money to spend on goods and services—is absolutely outrageous. I hope that the Western Australian Labor Party will give the federal government the sort of serve it justly deserves.
Explore WA Government Data
Search the full archive in the free dashboard, or query programmatically via API.
Explore more
Government Gazette
Appointments, regulatory notices, planning changes.
Hansard
Debates, questions, speeches and sentiment.
Tabled Papers
Reports and documents tabled in Parliament.
Committees
Committee profiles and recent reports.
Regulations
Subsidiary legislation with filters and summaries.
Bills
Proposed laws and parliamentary progress.
Acts
Current WA legislation and summaries.
Explanatory Memoranda
Bills with EMs (text/PDF) available.
Members
MP profiles, party breakdown and rankings.
Pollie Rankings
Data-driven rankings across 19 categories.
Amendment Chains
Track how schemes and regulations evolve over time.