Australia could raise an additional A$45 billion a year from mining, oil and gas during periods of high commodity prices by restructuring its resource tax and royalty system, according to new analysis.
The estimate includes around A$28 billion of additional annual revenue from mining commodities including iron ore, coal, gold, copper and lithium, alongside another A$16-A$18 billion from oil, gas and liquefied natural gas.
The central argument is that Australia’s existing system does not capture enough additional revenue when commodity prices and mining profits surge.
Unlike conventional company tax, resource royalties represent a payment to the public for extracting finite resources owned by states and territories.
Boom-sensitive royalties proposed
One proposal is for royalty rates to increase automatically when commodity prices rise substantially above long-term averages.
Queensland’s coal royalty system already uses that approach.
Rates increase progressively as coal prices rise, reaching 40% on the portion of prices above A$300 a tonne.
Supporters argue the system allowed Queensland taxpayers to capture more revenue during the extraordinary coal price boom without causing the widespread mine closures opponents had predicted.
Australia’s petroleum taxation system has attracted particular criticism.
The Petroleum Resource Rent Tax was designed to collect additional revenue from highly profitable offshore oil and gas developments, but generous deductions and accumulated credits have limited receipts from several major LNG projects.
Any attempt to increase resource taxation would face strong opposition from the mining and energy sectors, which argue higher royalties can reduce investment and make Australian projects less competitive.
The debate is becoming more important as governments face rising spending demands while Australia continues exporting enormous volumes of finite commodities.
