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Legislative Council - Fifty-Second Parliament, First Session (52-1)
2010-05-11 Daily Xml
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MINING SUPER TAX

The Hon. R.I. LUCAS (15:08): I seek leave to make a brief explanation before asking the Leader of the Government a question on the subject of the federal government super tax.

Leave granted.

The Hon. R.I. LUCAS: Last week, the minister gave a series of responses to questions on the super tax. I do not propose to go through all of those; nevertheless, he argued that the state government had not been contemplating an across-the-board increase in royalties but that, if it had been contemplating an increase in royalties, it related to only two instances: Olympic Dam and OneSteel.

The federal government has made it quite clear that the proposed super tax, as well as the proposed rebate of state royalties, would apply to existing royalty rates and any previously announced proposed increases. I forget the exact words, but it was something along those lines. That certainly catered to the circumstances in Western Australia, where premier Barnett had publicly announced a policy change for increased royalties. There is clearly now to be a debate in South Australia, because the Treasurer had indicated publicly, only in the last week or so, that he had been thinking about an increase in royalties although he had not made a previous statement about it.

My question to the minister is as follows: given that last week the minister made it quite clear that the state government has not been considering an across-the-board increase in royalties, does the minister now accept that any rebates of state royalties to mining companies in South Australia to be provided by the federal government will relate only to existing levels of royalty rates for all mines with the possible exception of Olympic Dam and OneSteel, which will clearly have to be negotiated with the federal government?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Industrial Relations, Minister Assisting the Premier in Public Sector Management) (15:11): The point I was making last week was that about 90 per cent of all mining royalties that this state receives come from two mines. We get petroleum royalties which are largely paid by Santos with some also from Beach and Stuart Petroleum and other minor players in the Cooper Basin, and slightly less than half of the state's royalties are petroleum royalties, but as far as mining royalties are concerned, about 90 per cent of that figure comes from those two mines.

That was the area where the government had been particularly looking at its revenue. The point I was making last week involving development of the mining industry was that copper gold has been the main mineral produced in this state. There have been exceptions, such as OneSteel with iron ore and obviously coal from Leigh Creek which was used for power generation, but most metalliferous mines in this state have been copper gold. In addition, we have had uranium produced at Olympic Dam and also Beverley.

Moving into different types of mining in this state, we have had the first mineral sands mines opening in recent years, and we can also expect that there will be more iron ore mines operating, so that is why it has clearly been appropriate for the state government to look at what is an appropriate rate of royalties for minerals other than those which have been traditionally produced and which provide 90 per cent of the mining royalties in this state.

As far as any commonwealth-state tax is concerned, the important thing is that we get the design of the commonwealth tax system correct so that it will maximise the opportunities for mines to go forward in South Australia. The best way that this state can achieve its maximum return from our resources is to have a project such as Olympic Dam proceed. As the honourable member will find if he looks at the statement that I have just tabled from the Treasurer, clearly the government—

The Hon. R.I. Lucas: That's not my question.

The Hon. P. HOLLOWAY: I know it's not the question but it is completely relevant to it. Let me make the point again: 90 per cent of the state's royalties to date come from two mines and we had been reviewing those. As I just indicated more generally, given the new type of mines that we have been developing in this state in areas that we have not previously been involved in such as mineral sands, a greater level of uranium and also iron ore, it is appropriate that the return on those mines should be investigated because, clearly, the structure of our mining industry is changing.

To come back to the issue of what would be rebated, one of the issues that this state will have to consider is that the royalties scheme in this state is designed to have a concessional rate for the first five years of mining to reflect the conditions actually faced by the mining industry, particularly those projects that have high initial start-up and capital costs but get a larger return in the later years.

In many ways, our royalty design, I would argue, is much more in line with the properties of a resource rent tax for minerals. It had many of the features that I believe the commonwealth tax is trying to replicate. Therefore, it would be unfortunate indeed if this state were to be penalised in this regard by its having a better designed royalty tax, deliberately designed to encourage mines to go ahead, relative to that which applies in other states. I am sure there are things we will be looking at and taking up with the Treasurer. I think we have a very good case to make in relation to that particular factor.

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