Punishing Western Australia but not too much. I cannot see that it really matters which government gets the extra money from the Western Australian mining industry — the state government by way of an increased royalty rate on iron ore fines or the federal government through its planned mining super profits tax.
To me it’s just another of those silly federal-state relations squabbles that the Commonwealth Grants Commission will sort out in the end by adjusting what it takes out from Canberra’s left hand pocket to put into Perth’s right. The main role for governments state and federal should be to ensure that mining companies pay a fair price for the access they are given to the people’s mineral wealth.
The issue came up during question time in the House of Representatives yesterday when the Minister for Resources, Energy and Tourism, Martin Ferguson, promised that, despite the state’s extra royalties grab, the Commonwealth stood by its commitment to increase infrastructure spending in WA “especially the Gateway project, which goes to a potential huge improvement in productivity because of the problems around the Western Australia airport not only for the mining industry but for the whole of the Western Australian economy, including the all-important tourism industry.”
On first hearing that answer seemed to be in conflict with previous threats by Julia Gillard that “we will … be adjusting expenditure for Western … Australia to protect the federal budget” but the Prime Minister assured Nationals Leader Warren Truss that it was not. Retribution there will be.
With a Martin Ferguson answer you have to do a bit of verbal decoding to fully understand what he meant by this second part of his answer:
The only potential reduction in infrastructure spending will arise from a potential decision by the WA government not to spend its increase in royalties on infrastructure spending in Western Australia — because, in essence, you cannot reduce the Commonwealth take, which was going to be spent on infrastructure, and then expect the same revenue stream to be spent on Western Australian infrastructure in the future.
I encourage the Western Australian government to do what the Commonwealth was going to do out of the MRRT — substantially increase infrastructure spending in Western Australia.