West Australian Premier Colin Barnett is not worried that his budget may cause frustration for federal Treasurer Wayne Swan.
WA Treasurer Christian Porter announced on Thursday the government would increase royalty rates on iron ore fines from 5.625 per cent to 7.5 per cent by 2014.
The increase on royalties for iron ore fines will bring in $1.9 billion in extra royalties to WA's coffers by 2015, creating a black hole in the federal government's budget.
"It's raining, I'm happy, you're happy, Wayne Swan's unhappy, bad luck," Mr Barnett said to laughter at a Chamber of Commerce and Industry breakfast on Friday.
The decision comes despite Mr Swan warning in March, when he unveiled the final details of minerals resource rent tax (MRRT), that the states should not raise royalty rates.
Mr Swan hit out at Mr Barnett, accusing him of playing politics with the mining boom and warned WA would suffer through a decline in GST revenue.
The WA premier on Friday rejected Mr Swan's accusations, saying the decision had nothing to do with the MRRT.
"The decision we took to phase out the long-existing concession on iron ore fines, we made that decision on its own merit, not in any way to impact on the federal government," Mr Barnett said.
He said miners "do not hesitate" to raise the price of commodities to their consumers in China.
"People in WA are entitled to get the full price of fines... It was a principled decision and the correct decision," he said.
Mr Swan continued the attack on Friday, saying there were "strange figures" in the WA budget and doubted whether the state would really net an extra $2 billion as a result of the decision to increase royalties.
"It's somewhat less than that, but I'm going to get the Treasury to do the work over the weekend," he told ABC Radio.
Mr Swan said WA's share of GST revenue would be cut by the Commonwealth Grants Commission.
"(WA premier Colin) Barnett will end up with less revenue, that's the Treasury advice that I've got," he said.
"Western Australia is a loser from this."
But Mathias Cormann, an opposition frontbencher and WA senator, accused Mr Swan of "going to war" with his state and pointed to Treasury modelling showing $25 billion out of $38.5 billion in mining tax revenue would come from iron ore production there.
"No wonder Western Australia made the legitimate decision seeking to protect its revenue base," Senator Cormann said.
Share
