Western Australian Premier Colin Barnett has reached agreement with BHP Billiton and Rio Tinto over increased iron ore royalties, mocking Kevin Rudd’s proposed RSPT.
Premier Barnett believes increasing the royalty rates paid by BHP Billiton and Rio Tinto from 3.75 percent to 5.625 percent from July 1st will benefit Western Australia more than Kevin Rudd’s Resource Super Profits Tax (RSPT) will. Western Australia’s royalties increase will generate an additional $340million in WA State royalties for the 2010-11 financial year and $1.06billion over the next four years.
Under the Heads of Agreement signed yesterday, both Rio Tinto and BHP will make a joint one-off payment to Western Australia of $350million.
Premier Barnett said modernising the State agreements reflected the maturity of the iron ore industry in Western Australia.
“This is a win-win deal which gives the companies greater flexibility to integrate their operations and ensures a better return to the community,” Mr Barnett said.
“Western Australia’s iron ore industry has come a long way since the first State agreements were signed with Rio Tinto and BHP Billiton in the early 1960s.
“The old agreements recognised the pioneering role the companies would play in the region and offered a discounted royalty rate to acknowledge that fine ore was not a valued product in the market at that time.” Mr Barnett said.
Federal Treasurer Wayne Swan reacted negatively to the news of the increased royalties to be paid in Western Australia, accusing Premier Barnett of hypocrisy for increasing royalties but opposing the Federal Government’s Resource Super Profits Tax.
Premier Barnett has told the ABC he believes Mr Swan’s comments are unwarranted..
“This is not about the overall level of taxation applying, the royalty is not a tax, it is the price at which, in this case, the state of Western Australia sells the iron ore to these companies.” Mr Barnett said.