Year Published: 2010

Language: English

Sector: Minerals

Issue:

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Background

The people of NSW own the minerals on Crown land and private land. The Government allows mining companies, via leases, to extract and sell these minerals for a price. This price is known as a ‘royalty’.

Mining royalties are a source of significant revenue to NSW. In 2008-09, the Government received $1.28 billion in mining royalties representing about 2.6 per cent of the total revenue collected by the Government that year. Coal accounted for over 95 per cent of the royalties.

The revenue the Government receives from mining royalties has increased substantially in recent times. Royalty revenue increased by 123  per cent between 2007-08 and 2008-09 (from $573 million to $1.28 billion), largely due to a sharp rise in coal export prices and increases in royalty rates.

The Royalty and Statistics Branch of the NSW Department of Industry and
Investment (DII) administers the collection of mining royalties.

This audit examined how well DII ensures mining lease holders pay the royalties they owe the State on time. Specifically, the audit assessed
whether DII:
 has complete, accurate, and up-to-date information on leases
 has clear rules for calculating and collecting royalties
 identifies late and inaccurate royalty returns
 undertakes comprehensive quality audits to validate royalty payments
 acts on late and inaccurate returns.