Rent-Controlled Resources

Prosper Australia’s Rent-Controlled Resources report examines Australia’s resource royalties. Australian states could capture an additional $14.5 billion in revenue each year by moving to a more flexible royalty model with variable rates that adjust to market conditions.

Key Points:

• Mineral rights are Crown property, belonging to all Australians.
• Royalties in their current form are an inflexible and inefficient method of pricing public property rights – like rent control for housing, they protect mining tenants from paying full market value.
• State governments, as resource managers, are giving Australia’s resource companies a cushy deal at the public’s expense.
• If Australia captured resource rents as effectively as Norway, governments could raise up to $66 billion more in revenue each year – enough to fund the abolition of payroll tax and stamp duty.
• A straightforward adjustment to royalty regimes, inspired by Queensland’s recent reforms, could yield an additional $14.5 billion per year by way of more commercially-oriented resource pricing.

Current royalty frameworks, which take a fixed share of the resource price regardless of profitability, fall short of delivering fair returns on Australia’s natural resources. Prosper Australia’s report suggests that a variable royalty approach that includes higher royalty rates during periods of increased market demand would better reflect the true value of resources sold – securing a more substantial revenue stream for states.

This pragmatic alternative to resource rent taxation could be enacted straight away without complex royalty redesign or rate-setting processes.

Properly pricing resources is a core part of the tax shift we need for a prosperous, equitable future. You can read more about our Tax Shift vision here.

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