While the O’Farrell government’s second budget sought to control the deficit – which is estimated to be $824 million this year – through prudent spending cuts and asset sales, it hit the mining industry with new administration charges under the guise of “improved compliance measures”, they said.

A new $13 million administrative levy will apply to the resources sector to expand government enforcement functions, as well as assessment, approvals and communication capabilities.

A further annual charge will apply to mineral and gas tenements which will see the expansion of the New Frontiers pre-exploration data collection initiative.

Association of Mining and Exploration Companies members would be particularly concerned that the two new levies would be imposed upon small and emerging explorers, who in the current tough economic and capital raising environment were struggling to remain operational in NSW, AMEC regional manager of NSW Bruce Edwards said.

“The $13 million administrative levy for all explorers and miners plus the levy to fund the continuation of the New Frontiers geosciences program are more disincentives to explore for minerals in NSW,” he said.

“The NSW budget strives for ‘regulation, compliance, assessment and enforcement’, but has fallen short on acknowledging the importance of promotion, stimulation and development in the mineral exploration and mining industry.

“The introduction of these new levies will only result in an increase of red and green tape, administrative costs and delays for an industry that is already highly regulated and taxed.

“Surely recent economic figures showing low growth in NSW and Victoria and a mining led boom in the states that actively encourage the mining sector, such as WA, QLD, SA and the NT, would have convinced the NSW government that further disincentives to invest in NSW were not in the best interest of all NSW residents.”

NSW Minerals Council chief executive Stephen Galilee said the extra charges represented yet another cost for an industry already paying significant taxes and royalties and about to pay the mining tax and the carbon tax.

Mining royalties paid to the NSW government totalled nearly $1.5 billion in 2010-11 and are forecast to rise to $1.9 billion in the next financial year, including new supplementary coal royalties of $235 million in this budget alone, rising to more than $500 million in additional costs in 2015-16.

Meanwhile in a sign of the NSW government support for rural interests, $4.8 million has been allocated from National Partnerships Agreement funding to resource the Gateway mine approval process, including advice on aquifer impacts and regional assessment work supporting the strategic regional land use plans.

Also $1.1 million in funding has been earmarked to progress development of a land use agricultural mapping policy as a tool to protect strategic agricultural land, with a focus on developing maps for the Central West, Southern Highlands, Alpine and Murrumbidgee regions over the next 12 months.

“Of course NSW risks losing significant mining royalties with the draft strategic regional land use plan casting a dark cloud over future industry growth,” Galilee said.

“Recent modelling undertaken by Monash University showed that under a medium impact scenario, NSW would forego almost $1 billion in mining royalties each year for the next 20 years if the draft land use plans proceed.”

Resources Minister Chris Hartcher said the administrative levy would be an annual charge equivalent to one per cent of the rehabilitation security deposit provided by titleholders across the state.

“The NSW government’s commitment to the mining industry recognises the key role mineral and gas exploration and extraction will play in rebuilding the NSW economy,” Hartcher said.

“There is a large and growing discrepancy between the funding available for regulatory activities and the expanding mining and gas industries. This will continue to grow as exploration activity increases.

“The new levy will mean the government is better placed to meet community demands for information, facilitate greater understanding of the resources sector as well as carry out regulatory activities.”

The New Frontiers program was an important element supporting mineral and gas investment in NSW and was one of the key actions in the NSW 2021 plan to attract and grow investment in the mineral and gas industries, Hartcher said.

“Currently NSW is the only state that doesn’t impose an annual charge on mining titles. Without this funding the successful exploration program would cease to exist.

“Government geoscience underpins private exploration and leads to new discoveries, crucial to ensuring that the NSW resources sector continues to grow strongly and supports regional employment growth.”

In 2012-13, $27.3 million is being provided for drilling and research and development of low emissions technologies under the NSW government’s Coal Innovation NSW Fund.

“The NSW government recognises the enormous benefits the resources sector delivers to this state, including employment of over 35,000 people directly and nearly 86,000 people indirectly through mine and non-mine related services,” Hartcher said.

“The NSW government will continue to support the ongoing development of the NSW mining and gas industries to ensure the continued expansion of the state’s resources sector and associated economic growth.”

Galilee also said the government had taken a welcome step forward in providing infrastructure funding for mining regions but more was needed.

“The $9.9 million from Resources for Regions to be invested in Muswellbrook hospital and in roads for Singleton is a good start in supporting the Upper Hunter as an attractive place to live and work,” he said.

“There is also $74 million in this budget set aside as part of the Hunter Infrastructure and Investment fund, including $15 million to improve roads in the Hunter.”