PERTH (miningweekly.com) – Western Australia would invest a further A$30-million between 2017 and 2020 on the Exploration Incentive Scheme (EIS) to facilitate the hunt for resources in the region, Treasurer Mike Nahan announced in the state’s 2016/17 Budget on Thursday.

He also stated that a further A$6-million would go towards the Minerals Research Institute of Western Australia.

Delivering the state’s Budget, which revealed that Western Australia would be in its largest-ever deficit in 2016/17, the Treasurer said that the downturn in commodity prices had hit harder than previously thought, but stated that the long-term fundamentals of the Western Australian economy remained strong.

“Western Australia is adapting to a new phase of the business cycle as some major mining projects move from construction to production and increase their focus on driving efficiencies, while a lower oil price, a more competitive exchange rate, lower rents and greater labour availability are supportive of growth in agriculture, education, tourism and health,” Nahan said.

He stated that the mining sector, in which Western Australia had a comparative advantage, would continue to drive growth, through a substantial expansion in exports. Exports were already the key driver of economic growth, with merchandise exports increasing by 8.6% in 2014/15, Nahan pointed out.

“From 2015/16 to 2019/20, iron-ore exports are expected to increase by around 50-million dry tonnes, which reflects most notably the ramp-up of production at the Roy Hill project. Liquefied natural gas (LNG) production capacity is projected to more than double – from over 20-million tonnes to nearly 50-million tonnes.”

Based on current producing projects and those under construction, Western Australia was expected to have the third-largest liquefaction capacity in the world by the end of the decade, with Australia as a whole being ranked number one.

“The resources boom and the accompanying population boom have left us with greatly elevated wealth and productivity,” the Treasurer said.

However, Western Australia’s income had suffered from what Nahan described as a  “perverse” goods and services tax (GST) system, which delivered the lowest ever return in terms of tax dollars, with only 30c for every dollar raised in Western Australia staying in the state.

“This equates to a A$4.7-billion loss relative to Western Australia’s per capita share and effectively means that all of Western Australia’s royalty income of A$3.8-billion, plus a further A$900-million, is expected to be redistributed as GST grants to other states in 2016/17.”

The state government was forecasting a net deficit of A$3.9-billion for 2016/17, the largest in the state’s history, and would be followed by a A$1.89-million deficit in 2017/2018, and a A$197-million deficit in 2018/2019.

The Association of Mining and Exploration Companies (Amec) on Thursday welcomed the investment into the resources sector, with national policy manager Graham Short saying the support of the EIS was sensible and the co-funded drilling programme provided significant social and economic return to the state.  

Short said that the support of the EIS also complemented the A$100-million announced in the federal Budget last week for the Exploring for the Future initiative, which enabled Geoscience Australia to make available pre-competitive data for state-based geological survey divisions and industry.

The magnetite iron-ore sector would also applaud the A$41-million which had been allocated over three years in a Magnetite Financial Assistance package in order to further promote development in that industry, Short said. This comprised a 50% rebate of royalty payments on a case-by-case basis.

He added that in view of the current economic climate, there was a clear case for a similar scheme to be made available for other commodity groups, such as nickel.

However, Short said that the increase in the tenement rental charges to collect additional revenue was most disappointing.

“In addition, as the Valuer General uses the Department of Mines and Petroleum tenement rental schedule to determine property values it will lead to an increase in land property values for shire rating purposes and higher rates notices from most regional local authorities. This is an unintended double hit for mining and exploration companies, which could have been avoided with prior consultation with industry.”