PERTH (miningweekly.com) – Western Australian Premier Mark McGowan has remained coy about the possibility of a hike in the gold royalty rate, ahead of this week’s state Budget.

Speaking at the fifteenth annual Africa Downunder Conference, in Perth, McGowan noted that the state was faced with ‘significant financial challenges’ inherited from the previous government.

“So our aim is to make sure that the burden of carrying this is shared across the communities, so that everyone plays a role in fixing this,” McGowan said.

“We want to see mining prosper, but we also want to balance the budget, and there will be a range of measures to deal with it. It is a difficult situation we face,” the Premier said.

The Western Australian Chamber of Minerals and Energy (CME) on Wednesday warned that hiking mining royalties would hurt the state economy, rather than improving it.

Acting CEO Nicole Roocke said that a rise in gold royalties would be disappointing and counterproductive in fixing state debt.

“Given the government is well aware revenues raised from royalties are eventually redistributed to other states through the current goods and services tax system, there is no justification for the increase at a time when the industry has lifted,” she said.

“While there have been a number of significant mine expansions for active gold producers and new gold mines under construction, which will drive demand for skilled workers and create job opportunities in this state, the gold price is comparable to what it was two years ago.

“These employment opportunities would be put at risk due to any royalties increase, which could also hurt future investments in the sector and possibly lead to mine closures.”

The Western Australian gold sector currently accounts for about 5% of the total resource industry royalties, contributing A$238-million annually, with gold sales in 2015/16 amounting to A$10-billion. The sector employs some 23% of mining industry workers, or around 25 000 people.