MINING ROYALTIES

In reply to Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (25 June 2008).

The Hon. M.D. RANN (Ramsay—Premier, Minister for Economic Development, Minister for Social Inclusion, Minister for the Arts, Minister for Sustainability and Climate Change): The Minister for Mineral Resource Development has provided the following information:

Budget paper 3, page 3.24 provides royalty revenue projections for mining, oil and gas production for the next four years to 2011-12—these are $163.5 million in 2008-09, $183.8 million in 2009-10, $185.5 million in 2010-11 and $193.8 million in 2011-12.

Royalties from the proposed expansion of the Olympic Dam mine have not been factored into the budget papers as it is still in pre-feasibility stage and to have done so would have been improper. Furthermore, the proposed expansion of the Olympic Dam mine would not commence generating additional royalty revenue within the forward estimate period and would take some years to become operational and then to reach full production.

The overall budgetary impact of increased capacity to generate royalty revenue will be affected by the Commonwealth Grants Commission's assessment of state and territory fiscal needs which determine GST revenue shares.

The fiscal equalisation process will redistribute a significant component of additional royalty revenue-raising capacity generated in South Australia to other states and territories through the distribution of GST grants. Similarly, growth in royalty revenue-raising capacity from mining expansions in other jurisdictions will be redistributed to the benefit of South Australia.

Forecasts for mining royalties are reviewed on a regular basis, and the budget numbers reflect the latest estimates. As the Premier indicated, royalties are not received until the mines actually open, and we will continue to provide updated royalty projections within the government's five year forward estimate period.