The McGowan Government has officially abandoned plans to hit up the WA gold sector for cash again ahead of next month’s State Budget.

Treasurer Ben Wyatt told WestBusiness in a statement this week: “The Government has no plans to increase the gold royalty rate.”

The response came amid renewed speculation in the industry that the Government could again look to the thriving gold sector to help plug holes in the State’s finances.

In 2017, the Government proposed raising the State’s gold royalty rate from 2.5 per cent to 3.75 per cent, but the plan was blocked by Liberals, Nationals and crossbenchers in the Upper House. It was expected to raise $392 million over four years.

Last year Mr Wyatt threatened to revisit the tax hike, insisting the gold royalty rate was too low.

The State’s mid-tier gold miners have enjoyed a purple patch in recent times, with an Australian dollar gold price above $1800/oz offering fat margins for their low-cost operations.

But pressure on the State’s finances was alleviated last year when a Federal political fix was negotiated to reverse WA’s GST shortfall.

The State Government will enjoy a windfall of $4.7 billion over the next eight years as part of the deal.

The solution also includes $1.7 billion in top-up payments until a 70¢-in-the-dollar floor is locked in from 2021-22.

The State Government is also expected to derive an extra $1 billion in royalties from WA’s iron ore industry as the price of the steel-making commodity soars in response to supply disruptions caused by a tailings dam disaster in Brazil, which killed hundreds this year.

Mine closures in the South American country, along with cyclone-related disruptions in the Pilbara and steady demand out of China have pushed the iron ore price rally to five-year highs above $US90/t.

Speaking this week after Northern Star Resources released its March quarter results, Executive Chairman Bill Beament said he would be very disappointed if the Government tried to lift the gold royalty again, particularly as the sector had invested heavily in exploration in the past 18 months since the proposal was defeated.

“We’ve put our money where our mouth was and we keep finding more gold for this State to keep jobs locally and in the cities, so I’d be very disappointed if something did transpire,” he said.

In March, it was revealed WA had jumped up the rankings of a global survey that measures attractiveness for investment in exploration and mining.

The annual Fraser Institute survey showed WA had improved from fifth last year to be the second most favourable jurisdiction in the world.


Image: Treasurer Ben Wyatt, The West Australian