WA budget draws mixed views

THERE have been some positive noises from mining groups over some of the measures in the Western Australian budget, but they have also raised concerns about cost increases for the industry.
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Western Australian Premier Colin Barnett seems to have squandered the spoils of one of the biggest mining booms ever.

Andrew Duffy

Overall, the Association of Mining and Exploration Companies said the budget was a mixed picture for producers and explorers in WA.

“The government should be congratulated for not being tempted to extract new and additional significant revenue streams from the mining industry, given the financial and economic pressures under which the budget has been drafted,” AMEC CEO Simon Bennison said.

“It is therefore particularly pleasing to note that any reference to increases in royalty rates has been removed from the budget and the forward estimates.

“This is a sensible and welcome outcome and will provide the industry with some critical certainty for business and investment planning purposes.”

AMEC welcomed additional funding of $A2.6 million for an extension to the Perth core library and the allocation of $11.6 million for the co-funded drilling program to 2016-17.

The Chamber of Minerals and Energy of Western Australia also welcomed confirmation that royalty rates would not be increased.

On a wider scale, the CMEWA approved the government’s planned asset sales.

“Getting debt under control and showing greater levels of expenditure restraint are necessary for WA to have any chance of restoring its AAA credit rating,” CMEWA chief executive Reg Howard-Smith said.

“These ratings send an important signal to foreign investors in the global marketplace and impact the WA resources sector’s ability to attract and retain vital capital.”

The new budget comes at a tough time for the WA economy, with falling commodity prices making a steep cut to state revenue.

Treasurer Mike Nahan told journalists at a briefing yesterday he would meet with ratings agencies in the coming weeks to take their view on the budget.

Taking stock of other initiatives, AMEC welcomed a move to reduce salaries and boost efficiency in the public sector.

On the negative side it raised concerns about “unsustainable” increases in water, energy and motor vehicle licencing costs that would impact all companies.

A number of other budget measures were also frowned upon.

“The proposed cost recovery of $2.7 million to meet a shortfall in the Department of Mines and Petroleum’s Reforming Environment Regulation Initiative is extremely disappointing,” Bennison said.

“AMEC is also concerned about the increase in the cost, from $39.5 million to $52 million, to operate the Department’s Resources Safety Division in 2015-16. A major component of this increase is the rent associated with office accommodation in East Perth.

“These costs should be met through the consolidated account and not from industry fees and levies.”

After almost a decade of boom times it is hard to believe that the state is so far in debt.

Regardless of the outcome, WA Premier Colin Barnett is being slammed from numerous angles over what many see as the squandering of the spoils from the largest mining boom to hit the state.