Mining exports rose $100 billion in a decade, yet they now contribute proportionally less to government coffers. And if WA had the same royalty rate as Queensland, WA citizens would have gained an extra $47 billion over the decade. Callum Foote reports.
Western Australia, Australia’s largest commodity exporting state, captures just 5% of its commodity export value as royalties.
In comparison, over the past 10 years, Queensland’s royalty scheme has collected double that – 10% of the total commodity export value. In fact, in 2020, royalty payments reached a record 15% of export value.
Queensland is followed by the Northern Territory at 8%, New South Wales at 7% and South Australia at 6%.
Only the non-resource intensive states Victoria and Tasmania earn less than Western Australia in royalties as a proportion of commodity exports, sitting at 3% and 2% respectively.
In other words, Western Australians only earn 5 cents for every dollar of mineral value exported from their state compared to Queenslanders 10 cents.
If WA captured the same royalty rate as Queensland, then WA citizens would have earnt an extra $47 billion over the past decade from the sale of its commodities.
Western Australia’s relatively small royalty take means that the public is missing out on vital revenue that is used to fund of public services in the state. As is, WA is the most reliant state on royalty revenue, with payments comprising 28.8 per cent of its annual budget. Queensland is second with 14.4 per cent, followed by NSW with 4.7 per cent.
Mining royalties have stalled as a percentage of Australian government earnings.
The annual value of commodity exports has grown 76% over the past decade to $290 billion a year, or an increase of more than $100 billion. Yet the proportion that royalty payments have contributed to government budgets has remained static for more than a decade, at about 3 per cent.
Moreover, this significant growth in revenue of mining companies has occurred at a time when the general economy has stalled, with no increase in GDP recorded since 2011.
Each state and territory decides how it operate its own royalty schemes, which determine the price paid by mining companies for the commodities that lie underground.
The effectiveness of each state and territory’s royalty scheme is determined by comparing the amount earned in royalty payments to the total export value of commodities originating from each jurisdiction.
In terms of actual royalty revenue, WA has the single largest take. As you can see from the graph below, WA and Queensland capture the largest amount of royalty payments.
However, WA has forged ahead of the rest of Australia over the past decade.
In 2008, at 37% Queensland earnt the largest portion of total royalty revenue ($3.3 billion). WA earnt 26% of total royalty revenue ($2.3 billion).
By 2019, more than a decade later in 2019, the tables had turned. WA accounted for a staggering 51% of all royalty revenue at $8.4 billion, with Queensland earning a 28% share with $4.5 billion in royalty revenue.
While WA earns the most in royalty revenue, proportionally it appears that Western Australians are being dudded.
In 2020, WA exported 360% more commodities than Queensland – $1.4 trillion to $30.9 billion – yet earnt less than double the royalties – $8.4 billion to $4.5 billion.
WA consistently accounts for the majority of Australia’s state and territory commodities exports, some 61% of the total over the past decade.
The Neroli Storytelling Colvin Foundation sponsored Michael West Media to produce this work of environmental journalism. This report and the associated articles are the result of that funding.
Callum Foote is a journalist and Revolving Doors editor for Michael West Media. He has studied the impact of undue corporate influence over Australian policy decisions and the impact this has on popular interests.