WA Premier Mark McGowan wants BHP Billiton and Rio Tinto to pay his cash-strapped government a multi-billion dollar lump sum in a buyout of their lease agreements and thinks it's "in their interests" to do so but the big miners are resisting.
The idea would involve the two iron ore miners paying the Labor government a large one-off cash sum in exchange for removing the 25 cents a tonne production rental fee that has been set at that price since the 1960s.
The two mining giants and Mr McGowan rejected the same idea when the previous Barnett government proposed it before the March election.
The WA Nationals criticised the fee as too low and announced a policy last year to raise it to $5 a tonne, prompting a fierce advertising campaign against the "new mining tax" by the industry and led to Nationals leader Brendon Grylls losing his seat.
New Nationals leader Mia Davies has retained the policy and again promoted it on Monday in a statement saying the miners were not paying their share.
Mr McGowan denies his suggestion is a similar mining tax to the Nationals', which he fiercely criticised before his election win, because he would negotiate it and not impose it.
"We need money there's no doubt," he said on ABC radio, citing the fact that state debt was approaching $42 billion and the budget deficit was $3 billion.
"It's something that we would do in negotiation with the miners if they wanted to and if it was in the interests of taxpayers and if it was exempt from GST distribution.
"It's removing a tax in return for a single payment to the state, that payment would obviously have to be very, very significant and in the billions of dollars to remove that fee.
"It might be in their interests ... to remove all the angst around this payment (such as) the National Party wanting to rip up state agreements."
BHP and Rio released statements saying they had not spoken to the WA government while the latter pointed out they had previously rejected it.
A Rio spokesman said the company had paid $1.5 billion in royalties to the WA government last year in addition to $1.9 billion in company tax and a BHP spokeswoman said the group had $11 billion in royalties in the past decade.
Business Council of Australia chief executive Jennifer Westacott likened the payment to the newly proposed bank levy and said there was a trend of governments that could not manage their budgets then taxing profitable industries.
The Chamber of Minerals and Energy of WA and Association of Mining & Exploration Companies also criticised the plan, saying the resources industries already made a significant contribution to the state economy through taxes.