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Parliamentary Questions

Question Without Notice No. 376 asked in the Legislative Council on 15 May 2018 by Hon Robin Scott

Parliament: 40 Session: 1
Answered on

GOLD ROYALTY RATE INCREASE — TREASURER'S COMMENTS
      376. Hon ROBIN SCOTT to the minister representing the Treasurer:
An article in the Kalgoorlie Miner of Monday, 14 May 2018, about the annual post-budget breakfast held on Friday, 11 May, quotes the Treasurer as advocating a 3.75 per cent gold royalty.
(1) Was the Treasurer correctly reported?
      (2) At the annual post-budget breakfast did the Treasurer describe the current 2.4 per cent gold royalty as ''discounted''; and, if so, why?
      (3) Is the Treasurer aware of the vital need for the gold industry to maximise exploration so that the Western Australian gold inventory of proved and probable reserves increases each year by more than the quantity of gold mined?
      (4) Is the Treasurer aware that whenever a senior representative of government expresses any cost increases to the gold industry, investors become nervous and enthusiasm for exploration is dangerously undermined?
      (5) Will the Treasurer undertake not to attempt any increase in the gold royalty during the current parliamentary term?
Hon STEPHEN DAWSON replied:
I thank the honourable member for some notice of the question.
(1) Yes.
      (2) Yes. The 2015 mineral royalty rate analysis recommends increasing the gold royalty rate to 3.75 per cent, which would equate to the benchmark return for all commodities of 10 per cent. The gold industry currently pays a royalty rate of 2.5 per cent.
      (3) The McGowan government has secured the exploration incentive scheme, which supports exploration and development of the mining sector across WA, with gold explorers being a major beneficiary. The geoscience data from the EIS is freely accessible for the benefit of all Western Australian prospectors and exploration companies, allowing them to continue to discover Western Australia's gold reserves. Western Australia's gold reserves are increasing, suggesting that new discoveries are outpacing production. Department of Mines, Industry Regulation and Safety data shows reserves increased in 2016 and 2017. Geoscience Australia showed an increase in WA's accessible economic demonstrated resources in 2015 and 2016.
(4) See the answer to (2).
      (5) In last year's budget we committed to a 1.25 percentage point increase in the gold royalty rate, reflecting that the gold sector's discounted royalty rate equates to just half of the benchmark return for all other commodities. This modest increase would have had a net impact of around $14 an ounce. Since that time the gold price has risen by $142 an ounce. Although the government is not seeking to reintroduce the royalty increase in this year's budget, we believe an increase in the rate remains justified.