• Media Release

Urgent tax reform needed to boost industry in regional Victoria

The Minerals Council of Australia (MCA) have appeared before the Victorian Liberals and Nationals Public Hearing Day on Tax Reform calling for reform to Victoria’s flawed gold royalty regime.

Reform to gold royalties, and competitive fees and charges are required to encourage mining investment, and deliver future revenues to help the state dig its way out of the Government’s debt hole.

To attract investment in mining that would benefit Victoria’s regional communities, reform of Victoria’s gold royalty system, along with its fees and charges regime, is urgently needed.

The current royalty system is flawed. In 2019, the government hastily introduced a new regional tax without considering the very real and serious impact on Victoria’s regional communities and jobs.

The gold royalty imposes a significant financial burden on regional gold mining jobs, equating to a $21,000 tax per job.

The royalty is self-defeating, because it was not tailored to Victoria’s unique and complex geology, is uncompetitive with other states and imposes regressively high tax rates on small mines.

In analysis for the MCA, economist Alex Sundakov noted that the government’s own ‘quantitative assessment contain errors of both fact and logic’ and that ‘the conclusion that the gold royalty in its proposed form will create a net public benefit derived from the quantitative assessment is not reliable.’

The MCA Victoria’s submission to the Tax Discussion Paper proposes a restructured gold royalty framework that would ensure a steady flow of royalties to Victorians without the risk of premature mine closures.

An exploration offset would allow exploration expenditure to be deductible against a royalty liability to encourage exploration and extend mine life in complex Victorian gold deposits.

This would deliver long term sustainable royalties to Victorians by removing high rates on mines in low and zero profit years.

In addition to paying all standard state taxes and charges, the mining sector in Victoria also pays special mining taxes.

Victorian mining paid $117 million in royalties in 2022-23, including $34 million in gold royalties. This is in addition to millions of dollars in fees and charges imposed on mining.

Gold mining helped build Victoria, and its resurgence in recent years has brought significant benefit to regional towns like Bendigo and Stawell.

Government policies need to enable more mining, not whack regional business with poorly thought through tax hits.

Victoria’s mining industry stands ready to fix this flawed system and secure enduring tax reform for the resources sector.