Treasurer Wayne Swan is trying to bully the mining states into freezing royalties to make up for falling commodities prices, Premier Colin Barnett says.
Mr Barnett told Fairfax radio today that while WA had no plans to raise mining royalties akin to Queensland and NSW, the Federal Treasurer was trying to shore up his own Minerals Resource Rent Tax in the face of expected falling revenues.
"Wayne Swan is demonstrating a bully attitude and it won't work," Mr Barnett said.
"When Wayne Swan and Julia Gillard designed their (MRRT), they imposed a tax on the mining companies and it was meant to raise $13 billion.
"They've spent it already, in terms of superannuation and commitments on infrastructure and tax cuts and the like.
"Commodity prices, particularly iron ore prices, have fallen, so they're not going to collect the $13 billion - (Mr Swan's) spent the money before he collected it."
Mr Barnett said the Treasurer was now threatening other states - particularly Queensland and NSW - in a bid to protect his own budget.
Mr Swan has written to the states warning they'll be penalised dollar-for-dollar, through cuts to GST revenue or infrastructure funding, if they increase royalties.
Any increase would hurt federal coffers after Mr Swan promised mining companies they would be reimbursed for present and future state royalties under the MRRT regime.
Earlier today, Queensland Treasurer Tim Nicholls says he will not yield to Mr Swan's "unsophisticated" threats about mining royalties.
Mr Nicholls has said he was weighing a royalties hike in next month's State Budget to help increase revenue and get the books back in the black by 2014/15.
Mr Nicholls accused Mr Swan of trying to protect his own budget, with no regard for those of the states.
"This is a fairly unsophisticated threat," he told ABC Radio.
"We understand that the Federal Ggovernment have got their own problems with their budget surplus."
Mr Nicholls said a decision had not yet been made to increase royalties.
But he said a royalties hike was one recommendation from the commission of audit into the State's finances, and it was being considered.