Gold Royalty in Western Australia
Today is the Double Tenth, the Anniversary of the founding of the Republic of China in 1911 under the leadership of Sun Yat Sen. I may have more to say about the Republic of China in coming days.
Today we have another important issue to discuss, because in just a few hours hundreds of goldminers, drillers, truckers, plant operators and family members will be attending a rally on the steps of Parliament House in Perth. It’s rather refreshing to talk about holding a rally on the steps of a house of parliament. You cannot get near the front steps of Parliament House in Sydney. As for Canberra, the closeted politicians are building a gigantic wall to keep the public even further away. They are compulsively careless about whom they allow to come to Australia. But once potential threats to peace and security are in Australia, the rest of us may be vulnerable, but the Federal politicians ensure that they are very well protected.
Now, back to Perth. Listeners to this program are well aware of the compelling evidence that economic problems, especially budget shortfalls, should never be addressed by raising the rates of taxation. My listeners know, for example, that in nearly forty years of Australian taxation history, every fall in the rate of company tax has resulted in an increase in the quantum of company tax collected. In the leadup to the West Australian election in March this year, we heard about an ill-conceived plan hatched by the WA Nationals under the leadership of Brendon Grylls. Mr Grylls wanted to slap an extra $4.75 per tonne on major iron ore producers, a levy which would have hit 78% of the State’s iron ore production. The Grylls levy was strongly opposed by Pauline Hanson’s One Nation, by the Liberal Democrats and by Shooters and Fishers. Those three parties now have five members between them in the WA Upper House. The Labor party wisely refused to support the Grylls levy. That is one of the reasons why the ALP won the election, and a Labor member has replaced Brendon Grylls in the seat of Pilbara.
Having proved that Western Australians feel they are taxed enough already, the Mark McGowan Labor Government has astonishingly decided to hammer the gold industry with a punitive tax. Treasurer Ben Wyatt has brought down a Budget incorporating an ill-advised increase in payroll tax, and what is even worse, a fifty per cent increase in the gold royalty. The increase from two and a half percent to three and three quarters percent will cost gold miners just over $20 an ounce at current prices.
There are major mines in Western Australia which are mining gold with grades less than one gram per tonne. One gram in a tonne is one part per million. At Telfer, one of the world’s most remote mines, Newcrest is mining gold at seven tenths of a gram per tonne. This is a wonderful technical achievement which brings the shareholders of Telfer around $21 per ounce in profit. The royalty increase will very likely put the Telfer Mine out of business. 1,500 jobs will be lost and the only significant source of indigenous employment in a radius of 200 kilometres will be extinguished.
All in all, the experts say that this royalty increase will stop production at mines which represent 15% of western Australia’s gold production. That is a big hit.
Mines which do not close will also suffer by having their mine life reduced. That happens in two ways. One because the tax increase forces up the minimum economic grade which can be mined. Two because scarce money which should be spent on drilling will instead be paid to the Government.
The way for the Western Australian government to boost its royalty income is to encourage more mines employing more Australians producing more gold and other minerals and paying more royalties. Hammering productive industry with tax increases is never the answer.
The WA government has recklessly turned its back on a substantial source of royalty revenue. The decision to ban uranium mining in Western Australia has no basis in logic, but is driven by an outdated ideology. Nuclear energy reliably supplies 75% of the electricity requirements of France. This immense contribution to European electricity supply helps compensate for frivolous, expensive and unreliable energy inflicted upon Europe in the form of windmills and solar panels.
Everyone who has a concern about the levels of atmospheric carbon dioxide should of course be applauding the prospect of Western Australia exporting uranium to China, India and elsewhere strictly for the generation of electricity.
At the present time it looks very much as if the gold tax is being increased to make up for the lack of future uranium royalties. How ridiculous it is to put gold miners out of work as a punishment for uranium exports being banned.
Pauline Hanson’s One Nation has given notice of a Motion of Disallowance, and if this is passed in the Legislative Council the gold royalty increase will be beaten. The five Cross Benchers need the support of the Nationals and the Liberals to pass the Disallowance Motion. The Nationals will reportedly back the Disallowance Motion and all eyes are on the Liberals. Let’s hope that they pay close attention to the speakers at today’s pro-gold rally.