WA drivers pay more in car registration than gas companies pay in royalties

The federal budget isn’t the only budget going around at the moment.

In the first week of May, the Western Australian state government also released its budget.

It is very interesting reading because part of the gas export tax debate has been from the WA Premier, Roger Cook, banging on about how important the gas industry is to WA.

During the Senate Inquiry into the Taxation of Gas Resources, Mr Cook told media that he did not support a 25% tax on gas exports: “I don’t support it … I don’t think it’d be good for Western Australia, and I’ve made those views clear to the prime minister.”

The Premier suggested that “if we are going to continue to attract the investment that we need for these projects which deliver prosperity, literally over decades, you have to make sure you provide a stable environment for these companies to be able to make those investment decisions.”

The WA Budget allows us to run a bit of a factcheck on this ‘delivering of prosperity’ aspect. It’s clear that this isn’t the case for WA taxpayers.

Gas companies – like other resource companies that mine iron ore or gold, or coal – pay a royalty to state governments for the gas they mine.

This is because the state governments own those resources.

The miners pay governments for those resources in much the same way as a property developer pays a government if they want to build an apartment block on crown land.

But in WA, pretty much all gas is offshore – in Commonwealth waters. So, they don’t pay state royalties.

But, for some small projects, the federal government does raise some royalties on gas and passes it onto the WA government as “North West Shelf grants”.

These grants however, are shrinking drastically. By the end of the decade, the amount of gas royalties paid to the WA government will be 72% lower than the amount paid in 2024-25:

It means that next year, once again, WA drivers and owners of cars will pay more in registration and license fees than gas companies do in royalties.

It gets even worse if you add up all the revenue forecast over the next 4 years. It’s not just drivers, but those paying the emergency services levy and gamblers who will all pay more than gas companies do in royalties. That’s quite amazing, given WA does not have pokies in clubs.

And while we have long been noting that WA drivers pay more in car registration fees than gas companies do in royalties to the WA government, the latest budget shows that the gap between the two is getting ever bigger:

The Premier might ponder just who is delivering prosperity. Because right now, WA’s drivers and gamblers are paying more tax to the WA government to help fund vital services, than are gas companies.