Skyrocketing mining rates brought down to earth

The state government has fast-tracked legislation into parliament to curb excessive rate rises on some tenements in the mining and petroleum sectors.

The changes, to the Valuation of Land Act 1978, will cut recent rate increases of up to 400 per cent on mining tenements and up to 3,000 per cent on petroleum exploration permits.

The rate increases stemmed from regulation changes in 2006, which escalated state government rents as exploration licences neared the end of their terms, under a ‘use it or lose it’ principle.

Mines and Petroleum Minister Bill Marmion said the introduction of cost-recovery for petroleum permits in 2013 had also pushed petroleum rents and rates up, with valuations calculated on five times the annual rent charged.

Mr Marmion said the situation was unforseen by previous lawmakers and the legislation would allow the Valuer-General to apply the reduced values for the 2015-16 rating year.

AMEC chief executive Simon Bennison welcomed the quick response from government.

“The unintended consequence of the Department of Mines and Petroleum’s escalating tenement rental schedule is that older exploration licences are valued higher for shire rating purposes, when in most cases they are no more valuable,” Mr Bennison said.

“Fast-tracking the amendments will ensure the unimproved value of mineral exploration licences will be calculated on the rent payable in the first year.

Lands Minister Terry Redman said the new legislation would reduce and stabilise local government rates by dropping the five-times multiplier on petroleum permits and ensuring the unimproved value of mineral exploration licences was always calculated on the rent payable in their first year.

“Land valuations and hence, local government rates, are calculated on multiples of 2.5 of these rent charges which resulted in these big jumps, years after legislation changes,” Mr Redman said.

“These changes will be welcomed by explorers and local governments, which have been under pressure from companies over these escalating rates.”