Colin Barnett has warned the Federal Government and the resources sector that WA will refuse to surrender royalties on its massive onshore gas reserves - no matter who wins the Federal election.
The Premier told The Weekend West yesterday that anyone who assumed State royalties would not be payable on onshore gas if it was also subject to a Federal tax was very mistaken.
Mr Barnett was responding to yesterday's exclusive report in _The West Australian _, revealing the Federal coalition had done a U-turn on a key element of the Government's mining tax package.
The Opposition will keep Labor's extension of the petroleum resource rent tax to onshore oil and gas projects, provoking Treasurer Wayne Swan to accuse the coalition of a "staggering backflip".
The measure will generate billions of dollars of revenue over coming decades as the coal seam gas industry expands.
According to the US Energy Information Agency, WA's Canning Basin is Australia's biggest potential shale region, with as much as 229 trillion cubic feet of gas, more than 11 times the resource to be tapped by the Chevron-led Gorgon LNG project.
"If there is another layer of taxation via the Commonwealth placing it on existing State royalties, then the State royalty will continue because the gas is ours," Mr Barnett said. "We will collect royalties regardless of what the Commonwealth does."
Federal shadow resources minister Ian Macfarlane said there was majority industry support for the existing PRRT regime to continue but this was not unanimous and there had been no final decision.
"When we are in government we'll have a discussion with the industry about what is the most efficient way for them to pay the Australian people and the people of each State the royalties that are due," Mr Macfarlane said.
WA Liberal Mathias Cormann conceded he had once wanted the PRRT expansion abolished along with the minerals resource rent tax but in recent months the industry's peak body had told the coalition it was "happy" with the PRRT as it was.