The 2016-17 State Government Budgets have revealed mining royalty rates will remain unchanged across Queensland, NSW, Western Australia, South Australia and Tasmania, perhaps due to the continued downturn in the resources sector and resulting weakness in royalty revenues. By contrast, Victoria announced a three-fold increase in the brown coal royalty rate, to take effect from 1 January 2017. Now that all State budgets have been handed down it is timely to review how mining royalties are charged and the royalty rates that are payable across Australia.

Changes to brown coal royalties

The royalty rate in Victoria is currently $0.076/GJ, (including CPI adjustments). This is expected to rise to $0.228/GJ if the Budget proposal proceeds. This will bring Victoria's per-GJ royalty approximately into line with the other states, after remaining unchanged for a decade (noting that the other States use tonnes, rather than GJ, as their method of calculation for coal).

The Victorian Government has suggested that the increased royalty rate will support the transition to cleaner energy sources and ensure that Victoria receives a fair value for its endowment of natural resources. It is estimated that revenue will double from $36 million in 2016-17 to $72 million by 2017-18. The Government has proposed a $12.4 million investment to assist with the transition from brown coal to renewable technology, helping generate benefits for the Latrobe Valley and Victoria more broadly. A further $24.2 million is also promised for the Victorian Energy Efficiency and Productivity Strategy to deliver improved energy efficiency outcomes and reduce energy price pressures on homes and businesses.

Tim Pallas, the Victorian Treasurer, has said power companies will absorb the change and there is no reason it will be passed on to consumers. He plans to brief the Essential Services Commission to ensure electricity prices will not rise. However, the opposition energy and resources spokesman David Southwick disagreed, claiming mining companies will have no choice but to pass on the increased costs.

Other royalty rates

The tables below summarise the current royalty rates for several important minerals across several States and Territories, demonstrating the differing royalty calculations and rate application across Australia.

Click here to view table.