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WA budget delivers another surplus

11th May 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – The Western Australian government on Thursday reported a budget surplus of A$3.3-billion in 2023/24, with a surplus position maintained over the next four years, supporting a record A$39-billion in infrastructure investment.

"Our strong economy and finances have given us capacity to deliver what is important to the Western Australian community, addressing cost of living pressures, record investments in the health system, boosting social housing, investing in jobs and diversifying the economy, and taking action on climate change,” said Premier Mark McGowan.

The government will invest more than A$3-billion to tackle climate change, with the funding package to include funding for large-scale battery storage systems in Collie and Kwinana, new wind power generation projects in King Rocks and near Eneabba, and significant investment towards network planning and upgrades to facilitate renewable energy expansion. 

The massive funding injection will help to replace the generation capacity of state-owned coal-fired power stations, which will be retired by 2030 to ensure a stable and secure electricity supply for Western Australia.

Meanwhile, A$463-million will go towards developing a more sustainable and diversified economy, taking the state government's total investment in economic diversification initiatives to support job creation and set up Western Australia's long-term future to more than A$3.8-billion since 2021.

“Through our economic development framework, Diversify WA, and the Future State strategy, the Western Australia government has outlined its plans for delivering a smarter, more sustainable and diversified economy,” said State Development, Jobs and Trade Minister Roger Cook.

“Complementing state Budgets from the past two years, in this Budget we have committed funding for a range of local industries, including energy, tourism and events, international education, primary industries, and science, innovation and technology.

“We are continuing to invest in broadening Western Australia's economic base by adding value to existing industries and supporting new industries.”

Additional measures contained within the Budget included A$40-million for the Sustainable Geoscience Investments package to accelerate critical minerals discoveries, which would help Western Australia meet the demand for minerals used in technologies such as electric vehicles, energy storage and batteries.

A$28.2-million will go to expand the state’s investment and trade initiatives, including establishing a new Invest and Trade WA Hub in Texas to enhance the state's presence and develop economic opportunities in the Americas region, while A$370.9-million will go towards the Westport project. 

A further A$136-million investment will support critical port infrastructure, including technology investments at Southern Ports, and expansion of wharf facilities at the Port of Broome to support the export of mineral sands, and A$20.7-million will go to meet increased demand for the Regional Airfare Zone Cap to provide affordable airfares for regional residents.

A further A$2-million will be invested to continue the liquefied natural gas (LNG) Jobs Taskforce for a further two years.

The Chamber of Minerals and Energy of Western Australia (CME) on Thursday said that the state Budget had highlighted the significant contribution that the mining and resources sector made to Western Australia, with the surplus being A$2.4-billion higher than forecast six months ago, primarily thanks to the state’s strong iron-ore sector and higher-than-expected commodity prices.

The CME noted that the sector’s contribution of A$12.7-billion in royalties estimated for 2022/23 was slightly up on last year’s and included A$9.2-billion in iron-ore royalties, A$1.3-billion in North West Shelf grants from oil and gas projects, A$910-million from lithium and A$469-million from gold. 

CME CEO Rebecca Tomkinson said with A$148.8-billion of projects underway or in the pipeline, Western Australia’s mining and resources sector would continue to play a major role in securing and growing the state’s economic future. 

“In handing down their respective Budgets this week, the state and federal governments have both highlighted the strong performance of Western Australia’s mining and resources sector and the associated royalties that have flowed back into the economy,” she said. 

“The Budget makes it clear that this significant contribution of our sector has helped the Western Australian government fund a record A$39-billion of investment in education, healthcare, transport and government services over the next four years.” 

Iron-ore royalty income is forecast to account for 83% of total royalty income in 2022/23, and to average around 75% of total royalty income from 2023/24 onwards. In 2023/24, royalty income from commodities, excluding iron-ore, is projected to rise by a further A$136-million, with gold royalties rising by a further A$75-million, lithium royalties by A$18-million and nickel royalties by A$20-million, thanks to a growing demand for electric vehicles. 

The CME welcomed the A$2.8-billion investment in this year’s Budget for energy storage, wind power generation and transmission network upgrades on the state’s main electricity grid. 

“Investment in the decarbonisation and augmentation of our electricity networks is a key component of industry’s delivery against net zero commitments and will support growth in hydrogen and critical minerals,” Tomkinson said.

The Association of Mining and Exploration Companies (Amec) said on Thursday that the record royalties from the resources sector had enabled the state government to provide much-needed support for cost-of-living measures, as well as major investments in health, education, housing and decarbonisation.

“To continue this success, Western Australia needs to re-invest in growing our resources sector, and supporting emerging industries that will diversify our economy and drive future growth,” said Amec CEO Warren Pearce.

“And while the state continues to make investments to support economic diversification, most of these funds are focused on infrastructure delivery. The federal Budget on Tuesday failed to deliver major support for critical minerals and value-adding opportunities, and the Western Australian Budget also offers little additional support,” Pearce said.

“Western Australia needs a more focused approach to diversifying our economy, and one that leverages off the strength of the mining industry, with investment in downstream processing to realise greater value from our resources here at home.

“In an increasingly competitive international environment, Western Australia needs to do more to incentivise international investment.”

Pearce said that the federal and state Budgets were Australia and Western Australia’s first chance to respond to global efforts to steer investment capital in the critical minerals value chain away from Australia.

“Both Budgets have missed this opportunity to signal to the world that we are prepared to fight for these investments, the high-paid, high-skilled jobs and the long-term economic benefits they offer.

“There is still time, and our industry will be looking for both the state and federal governments to back us in as we pursue these opportunities.

“For the broader state’s mining and exploration industry, practical and meaningful support comes down to some basic factors: ensuring timely approvals and reducing regulatory and cost burden. Delivering on promised streamlining and reducing costs of doing business when industry is buffeted by high inflation is critically important,” Pearce said.

Edited by Creamer Media Reporter

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