The New South Wales State Government has announced it will follow Western Australia's example and move to increase mining royalties. The changes will be announced in the State Budget this week after State Treasurer Mike Baird outlined the policy.

 

Mr Baird said that the royalties increase will only apply to companies that are due to taxed under the Federal Government's planned mining and minerals rent tax (MRRT).

 

The move by the NSW State Government is likely to cause similar friction experienced between the WA and Commonwealth Governments earlier this year. The Federal Government, which pledged to pay any increases to state based royalties, threatened to cut WA's supply of GST after the state outlined planned royalty hikes. The Federal Government will likely move to apply the same penalties against the NSW Government.

 

The move by the State Government comes despite Mr Baird saying that New South Wales had no intention on following suit after WA Premier Collin Barnett announced the planned royalties increase.

 

The NSW Government argued that royalties had to be increased to offset the costs associated with the Federal Government's planned carbon tax.

 

The State Government has said that the final increases in royalty payments will be negotiated with miners following the passage of legislation later this year.