Western Australia's Exploration Incentive Scheme may be on the chopping block after the opposition blocked the Labor government's plan to hike the royalty rate levied on the gold industry.
The government recently announced that it planned to continue the EIS, committing funding of A$10 million in the 2018 and 2019 financial years.
The co-funded program offers juniors up to a 50% refund for exploration drilling and has supported more than 560,000 meters of drilling and contributed to at least 25 new discoveries, including Independence Group NL's Nova nickel mine.
However, the Western Australian government is now looking at all its options, including potentially axing the EIS, after the Liberal Party voted against the increase of the gold royalty rate, which would have generated about A$400 million in additional revenue to help patch the state's budget.
"The government will have to look at all expenditure and work out how we can make up the shortfall of A$400 million over four years that was taken out of the budget by the decision of the Liberal party to not face the fact that they ruined the finances of Western Australia," Mines Minister Bill Johnston told reporters Oct. 17 on the sidelines of the Australian Nickel Conference in Perth.
"I'm not saying the EIS will necessarily be cut, but I'm saying that clearly we have to come to terms with that … loss of revenue."
The Liberal Party is also trying to block the proposed five-year payroll tax that would be levied on major corporates from July 1, 2018, and generate an additional A$435 million in revenue.
Employers with Australia-wide payrolls between A$100 million and A$1.5 billion would be taxed at a rate of 6%, while those with a payroll exceeding A$1.5 billion will be taxed at a rate of 6.5%. According to Johnston, the move would impact just 1% of companies in Western Australia.
The minister said the government has to try and overcome A$5 billion worth of revenue write-downs, but is still a long way from filling the gap.
"We haven't quite got to the A$5 billion yet … I think it's A$600 million over four years we haven't been able to find yet," he said.
"We'll have to see how we can respond. We will have to go through and have a look because we can't allow the state's finances to get in a mess. [Treasurer] Ben Wyatt's budget set the foundations for improvement in this state, unfortunately the Liberal party from the grave are trying to wreck the finances like they did when they were in government."