OESR’s latest Queensland Economic Review released today contains an informative piece on the Grants Commission’s treatment of mining royalties – i.e. effectively taking a big chunk of them away from us (and WA) by allocating us less of the GST revenue than it would have if mining royalties were lower and we needed the GST revenue more. Thankfully Queensland Treasury is on the case and has a sound logical argument:
Under the current methodology for assessing mining royalty capacity, a large proportion of any additional revenue raised by the resource states will be redistributed to non-resource states. The resource states argue that the current redistribution process fails to take account of the costs of developing and maintaining associated economic and social infrastructure, potentially creating serious incentive problems.
Queensland considers that alternative approaches to the mining methodology must be a priority of the current GST Distribution Review.
Of course, given the budgetary problems faced in the non-resource States, especially Victoria, I’d be very surprised if we win this argument, but good luck to Treasury in prosecuting the case.