The Weekend West, 3.9.16:
It is time to challenge the historical arrangements for revenue received by the people of WA for the right to mine and export our natural resources.
I supported the Prenlier when he questioned the miners pouring iron ore supply into a depressed market in 2014 and reminded the companies to “remember who your landlord is” or risk a royalty increase.
In this context it does not present a sovereign risk, nor is it discriminatory to examine an outdated 25¢ per tonne special lease rental which has never been increased.
As the landlord, good governments are expected to review and revise all aspects of State mining policy to ensure the original intentions are being achieved.
No West Australian is paying the same rent to their landlord today as they were in the 1960s.
It is the task of government to strike a balance between fair revenue returns to the State and continuing to facilitate investment in the sector.
State Agreements must be capable of change. The world and the iron ore industry – has changed significantly since the 1960s.
Huge gains through technology and innovation, resulting in more production with fewer employees, mean one of the key reasons for government support of mining activity – the creation of jobs and associated payroll tax revenues – is declining.
Adding to this, Singapore trading hubs, favourable foreign tax treatments, international outsourcing of worksite administration and automation of all aspects of the industry have fundamentally changed the resource sector’s contribution to the State.
West Australians have every right to question what the Singaporean Government did to assist the mining industry in return for the tax revenue it now receives.
A closer look is needed at what WA receives in return for the facilitation of the sector’s expansion and our ongoing support to mine our precious resource.
How different the negotiations with Sir Charles Court might have been over the original State Agreements if the discussions centred on having more workers in Asia than the Pilbara, driverless trucks, robot drill rigs and trains, and FIFO camps in the North West.
Less than 12 months ago, in the depth. of the mining downturn, Rio Tinto boasted about its resilience and profitability, not to mention its aim to increase production levels despite the spot price of iron ore dipping below $US40 a tonne.
Now, with the spot price around $US60, a WA Nationals’ policy proposal for an increase to the 25¢ special lease rental, which hasn’t been touched in 50 years, surprisingly represents Rio’s “No.1 global risk”, according to chief executive Jean-Sebastien Jacques.
The argument that the special lease rental is discriminatory was never made before the National~ policy announcement despite the miners having paid it for decades.
One could speculate that is because the miners never wanted to highlight it hadn’t been indexed to maintain its real value.
If it is acceptable for the Government to ask families and businesses to pay increased State fees and charges, then asking the miners to do the same is not discriminatory.
The economic circumstances West Australians now face at the end of the resources construction cycle, with the “Pyne/Xenophon government” stealing our GST and the legacy State Agreement miners seemingly unwilling to pay their fair share, demand someone stand up to both.
The 12 WA Nationals MPs will. It’s a pity others elected to represent WA will not.
Brendon Grylis is leader of the WA Nationals.