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House of Assembly - Fifty-Second Parliament, First Session (52-1)
2010-05-11 Daily Xml
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Question Time

MINING ROYALTIES

Mrs REDMOND (Heysen—Leader of the Opposition) (14:58): My question is to the Treasurer. If changes to the state's mining royalties regime were 'always on the agenda', as stated by the Treasurer on 3 May 2010, why did the Treasurer not inform the South Australian people or the mining sector before the state election? Neither the Mid-Year Budget Review released on 28 January 2010, nor Labor's mining election policy released on 25 February 2010, nor even Labor's election costings released on 18 March 2010 made any mention of an increase in mining royalties.

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Federal/State Relations, Minister for Defence Industries) (14:58): The government is entitled to have a view about certain matters that it may be considering. It actually appears in the terms of reference of the Sustainable Budget Commission. I am looking for the exact wording; I just can't put my hands on it, but we have it in the Sustainable Budget Commission that the Sustainable Budget Commission is entitled to look at matters of revenue, and that was released in its terms of reference well before the state budget.

Mrs Redmond interjecting:

The Hon. K.O. FOLEY: I am trying to answer the question. If you would like me to answer it, could I do so without being interrupted? Would that be possible? It was made very clear in the terms of reference of the Sustainable Budget Commission that revenues and charges are a matter for the commission to report on. Whether the government chooses—

Mr Williams interjecting:

The Hon. K.O. FOLEY: No—whether the government chooses to accept those recommendations or not, that is a matter for the government—

Members interjecting:

The SPEAKER: The opposition will note that it has asked the Treasurer a question, so will it allow him to answer that question.

An honourable member: It's going to be a long haul.

The Hon. K.O. FOLEY: Four years; pace yourself, Isobel.

An honourable member: You won't see the distance.

The Hon. K.O. FOLEY: Pardon? I won't see the distance?

Members interjecting:

The Hon. K.O. FOLEY: I won't see the distance? It's like the 'Knights who say Ni', isn't it? 'Come and fight me; fight me!' Since the election in the pre-budget period, as I always do with my budgets, we look at a number of issues. The issue of resources—I have now put my hand on it.

Members interjecting:

The Hon. K.O. FOLEY: Unlike some members of parliament, I do not rely on my staff to hand me bits of paper to give me an answer.

Members interjecting:

The Hon. K.O. FOLEY: Isolated incident. The commission will have the capacity to review all government expenditure and revenue. It was actually in the paper I had; I just could not find it.

Members interjecting:

The Hon. K.O. FOLEY: That was released publicly months ago.

Mrs Redmond: Royalties.

The Hon. K.O. FOLEY: That is a revenue. It was released publicly—

Members interjecting:

The Hon. K.O. FOLEY: Madam Speaker, I am not going to bother. I am happy to give an answer, but if members opposite want to heckle, I have better things to do with my time. The federal treasurer, Wayne Swan, made it clear to all treasurers in a telephone hook-up on Sunday that if there were royalty issues in train under consideration he would accept that and allow us to increase those royalties, which under the resource rent tax would have no further impact on the mining company—it would be at a loss to the commonwealth. I think it is a good thing that we are looking at increasing royalties, because—

Mr Williams: So, were they in train?

The Hon. K.O. FOLEY: Yes, they were. If the member is saying to me that we just thought it up on Sunday morning, the commonwealth is not that gullible; it is going to require a bit of authenticity behind it.

Members interjecting:

The Hon. K.O. FOLEY: The woman who would not meet with BHP before the election, the leader, who would not support a desalination plant, wanted to put it 300 kilometres away and cost BHP another $300 or $400 million, wanted to move some of—

Mr WILLIAMS: I rise on a point of order.

The SPEAKER: Point of order, Treasurer. The member for MacKillop.

Mr WILLIAMS: The point of order is relevance. The minister is struggling to answer the question, and he has now gone off on a complete tangent to the question.

The Hon. P.F. CONLON: Point of order, Madam Speaker. It sits ill in the mouth of the—

Mr WILLIAMS: Is there a point of order on the point of order?

The SPEAKER: We can only have one point of order at a time.

Members interjecting:

The Hon. P.F. CONLON: I just point out that it sits—

Members interjecting:

The SPEAKER: Could we have some order from the opposition, please.

The Hon. P.F. CONLON: Unfortunately, three votes got you deputy leader; it did not get you a speakership. Madam Speaker, it is impossible for my friend to stay relevant if members opposite are going to engage in interjections, and it sits ill in their mouth to ask for standing orders when they will not observe them.

The SPEAKER: I agree with your comments, Minister for Transport. This is a really important question, particularly for my electorate. Could the Treasurer please return to the substance of the question and respond accordingly, and ignore interjections from my left side.

The Hon. K.O. FOLEY: I have the answer for the leader if she would just please give me the opportunity to present it. We are negotiating with BHP Billiton the expansion of Olympic Dam. It is a new project and will be subject to a new royalty rate. We have made that clear to BHP, and BHP has made it clear to us that they do not want to pay any more royalties. One thing I can assure the leader is that the biggest mining company in South Australia was aware that we were considering the issue of an increase in royalty rates, because they kept making the point in our discussions that they would be unhappy if we were to increase royalty rates.

Can I say, without breaching too much internal confidence—and I am happy to brief the leader privately—that it would come as no surprise that we have been diligently working at a high level for some years now on a whole raft of elements that impact on Olympic Dam, including what is an appropriate royalty rate to charge for Olympic Dam, given that the current indenture bill was signed off 25 years ago, or whatever, at a lower rate than—

Mr Pisoni interjecting:

The SPEAKER: Order! The member for Unley, please be quiet. Treasurer, continue with your answer.

The Hon. K.O. FOLEY: At 3.5 per cent the royalty rate charged to BHP Billiton for its uranium, and the copper royalty rates that are levied, were at a low level compared to comparable mines elsewhere in Australia. BHP knew full well that it would be only appropriate—albeit they would not have been happy—that this government would have been considering the increase in royalties in our negotiations.

What we have chosen to do with BHP—and they are well aware of this—is to have a raft of matters that we are working through with BHP. As we have seen, the desalination issue is one issue, as is the removal of shacks in the member for Stuart's electorate. We are looking at a whole range of issues through the EIS process, and both parties, both government and BHP, were always going to leave the issue of the final royalty debate/argument/stoush/arm wrestle until we had cleared most other obstacles.

There is a substantial body of work within government that has been undertaken over the course of the last 12 months about the royalty issue on the BHP mine. Now, what has happened, of course, is that that has been gazumped by the resource rent supertax. What I have said is that for some time we have been considering this issue, and the federal Treasurer—

Mr Williams interjecting:

The Hon. K.O. FOLEY: Well, it's no secret to BHP.

Mr Williams: What about OzMin at Prominent Hill?

The Hon. K.O. FOLEY: I'm talking about the BHP mine. Ultimately, this government has and does work extremely well with the mining industry in this state. It has been a Labor government that has delivered the mining boom in South Australia, a Labor government that is pro-mining, a Labor government that is pro-jobs, a Labor government that is pro-investment, and a Labor government that knows how to run an economy.

Members interjecting:

The SPEAKER: Order!

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