MINING (ROYALTIES) AMENDMENT BILL

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for the Status of Women, Minister for State/Local Government Relations) (18:05): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

In the 2012-13 Mid Year Budget Review, the Government announced reforms to the timing of royalty payments collected by the State, for producers with expected annual royalties in excess of $100,000 required to make royalty payments monthly in arrears from 1 July 2013. This Bill reflects those reforms for mineral producers who pay royalties under the Mining Act 1971.

This change to royalty collections was estimated in the Mid Year Budget Review to provide a one-off benefit to the State of $31.6 million in the 2013-14 financial year.

The revised payment arrangement aligns South Australian royalty payments for large mineral producers with the timing of royalty payments in some other Australian jurisdictions. In addition, it aligns large mineral producers' royalty payment arrangements with royalty arrangements for South Australian petroleum and geothermal producers.

The amendments set out in this Bill have no impact on producers with an annual royalty liability of less than $100,000.

Mineral royalty provides a significant income stream to South Australia, collecting $119 million in royalty receipts in 2011-12. Approximately $79 million of the total mineral royalties collected in 2011-12 was paid quarterly due to specific producer indenture terms which differ from payment conditions set out in the current Mining Act 1971.

Amendments to indenture arrangements are being progressed separately to this Bill.

Only around 30 producers of a total of around 300 mineral producers in the State are expected to be affected by these changes. The 30 producers represent almost 95 per cent of the total mineral royalty revenue received by the State.

While legislation changes the timing of payments for major producers, the administrative arrangements previously applied will not change. Specifically all producers that may pay royalties on behalf of a grouping will continue to do so as they have done over the years. To ensure there is consistency and clarity, the mineral producer likely to have an annual royalty liability of $100,000 or more will be nominated as a designated miner captured by the proposed amendments.

In accordance with the Mining Act 1971, producers are currently required to provide a six monthly return with their royalty payment which summarises production and sales data relevant to the royalty period. While the new payment arrangements will require major mineral producers to make monthly royalty payments, the returns will continue to be required on a six monthly basis in July and January (covering the preceding six months) for all producers, minimising any administrative burden for producers.

In March each year, a 'notice of assessment' will be provided to each designated mining operator setting out the monthly payment schedule, for the next financial year. A transitional provision included in the Bill allows for the initial notice to be given after the Bill is passed.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

The measure is to be taken to have come into operation on 1 July 2013.

3—Amendment provisions

This clause is formal.

Part 2—Amendment of Mining Act 1971

4—Amendment of section 17D—When royalty falls due (general principles)

This is a consequential amendment in view of the enactment of proposed new section 17DA.

5—Insertion of section 17DA

17DA—Special principles relating to designated mining operators

New section 17DA will introduce a scheme under which mining operators who satisfy criteria set out in subsection (3) may be required, by the Minister, to pay royalty monthly in advance in respect of a particular financial year on the basis of estimates made by the Minister. The scheme will include half-yearly adjustments to take into account actual royalty calculations, and the Minister will be able to vary any assessment from time to time and to extend any date on which a payment of royalty would otherwise fall due.

Schedule 1—Transitional provision

1—Transitional provision

The Schedule sets out a transitional provision that will allow arrangements to be put in place so that the new scheme can be operational in relation to the 2013/2014 financial year.

Debate adjourned on motion of Hon. R.I. Lucas.