WA budget: old miners’ fury as election promise broken and gold tax lifted

Jobs losses and cuts in investment will flow from the WA government decision to increase gold taxes, miners say.

West Australian Treasurer Ben Wyatt yesterday. Picture: AAP

Western Australia’s gold industry has warned of job losses and deep cuts in investment after the state government slugged it with a 50 per cent increase in royalties.

Premier Mark McGowan and Treasurer Ben Wyatt yesterday confirmed gold royalties would rise from 2.5 per cent to 3.75 per cent, despite previous assurances that gold royalties would not increase under a Labor government.

The rise is expected to cost the state’s miners about $20 for each ounce of gold they produce and will deliver the state an estimated $392 million in extra revenue over the forward estimates.

There was increased speculation in recent weeks that the gold sector had been singled out, and the industry was quick to express its disgust yesterday.

Northern Star Resources executive chairman Bill Beament said the hike was difficult to reconcile with Labor’s election platform of creating jobs. “The adverse impact of the increased tax on employment, particularly in remote areas, and exploration, which drives economic and employment growth over the longer term, undermines the McGowan government’s claims to be the party of jobs and opportunities for West Australians,” Mr Beament said.

“Rather than helping to solve WA’s economic problems, this increased tax will simply make matters worse by imposing another hefty cost on a local industry which is playing a vital role in creating local jobs and driving ­economic growth.”

Chamber of Minerals and Energy acting chief executive Nicole Roocke said the rise would put at risk many of the 25,000 jobs in the state’s gold industry.

“Gold companies, who have only recently starting expanding and constructing new mines, will feel betrayed by this decision and concerned about the future of the industry,” Ms Roocke said.

The increased royalty rate will apply only as long as gold trades above $1200 an ounce. It now trades at about $1675 an ounce.

The near-record highs in the Australian dollar gold price has driven a sharp turnaround in the fortunes of Australia’s gold sector. Newcrest Mining, Northern Star and Evolution Mining have unveiled bumper profits in their recent results.

Many of WA’s big gold mines are enjoying profit margins of between 40 and 50 per cent. The gold miners are also among the hundreds of big companies that will be affected by the payroll tax announced as part of the budget.

Mr McGowan apologised for breaking his pre-election promises but said the steps were necessary.

“We were left with the choice of asking mums and dads to carry more of the burden, of asking small and medium enterprises to carry more of the burden, or consider other options for budget repair,” he said. “It’s only fair we ask the state’s largest companies and largest industries to help recover the huge revenue hits to our state.”

Association of Mining and Exploration Companies acting chief executive Graham Short labelled the rise a “shortsighted baffling cash-grab” and said most extra revenue would be lost to WA through GST redistribution.