04 Sep 2024
Sign up now for regular updates
All Queenslanders should benefit when the price of coal increases - and we already do.
However, the Queensland Government's decision, without industry consultation, to raise royalty taxes to the highest in the world has made Queensland uncompetitive, putting investment, jobs and the long-term interest of all Queenslanders at risk.
Queenslanders own all mineral and energy resources in the State.
When a commodity like coal is mined, the miner pays a fee (a royalty) to the State Government for the use of our coal.
In Queensland the fee is a share of the sale price - so the tax paid already goes up when prices go up.
Queensland already had the highest coal royalty rates in Australia.
Lifting the top rate from 15% to 40% means that the cost of Queensland coal will now be much higher than the equivalent coal from NSW.
So where do you think customers will go to buy coal? And where do you think companies will choose to invest their money?
Vital investment, projects and jobs will be lost to Queensland in favour of other states and countries with more favourable tax regimes.
No. The royalty is paid on the sale price, so as prices increase - royalties have automatically increased under the previous system.
What's changed is that the royalty tax rate has been increased from 15% to 40% - the highest in the world and five times the rate of NSW.
The net effect of this change is that it will drive investment and jobs interstate or overseas.
The Queensland Coal industry support around 12% of Queensland jobs and 16% of the economy - either directly or indirectly.
https://www.qrc.org.au/wp-content/uploads/2021/12/Coal2021.pdf
The Queensland Government says over the past 12 months, coal accounted for around 60% of the total value of Queensland exports.
https://www.treasury.qld.gov.au/queenslands-economy/economic-dashboard/
In regions like Central Queensland, coal mining is responsible for almost three quarters of economic activity.
Three in every four dollars are generated by coal mining – so it’s the lifeblood of these regional communities.
https://www.qrc.org.au/wp-content/uploads/2021/11/Mackay-Region-2021.pdf
Much of developing world, particularly South East Asia, is projected to increase demand for steel-making and energy coal for many years to come.
As we work towards a low-emissions future, we will need overseas investors to support hydrogen and renewable energy projects in the future. If they see the Queensland Government can change the tax rules after they have made massive investments in our state, they will invest their money elsewhere.
The sudden increase in coal royalty rates has sent a shockwave through the global investment community.
Resource projects have a long life and so the rates of return are modelled over years and decades.
The feedback from investors was fast and alarmed.
Major global companies including BHP and Peabody have said future investments in Queensland are on hold or at risk because of the royalty increase, which was introduced without any consultation.
A survey of the Queensland exploration industry found that an astonishing 93% said that the coal royalty increase would affect their ability to access finance.
Taxing extra tax when prices are high is just a temporary benefit for the Government, but there will be long-lasting damage to Queensland's reputation as a stable and reliable place to invest.
Around 451,000 Queenslanders rely on the resources industry for their livelihoods - either working directly in mining or in the thousands of businesses that benefit from the industry.
When Government suddenly increases tax rates, it makes Queensland uncompetitive as an investment destination. This puts current and future jobs of being lost to NSW or overseas.
The Queensland coal sector accounts for around 60% of all direct jobs in the Queensland resources sector.
Even if the skills were transferable, there are simply not enough resource projects available to replace high quality, high paying coal jobs.
The coal sector also supports a significant number of jobs in industries that supply coal operations.
Closing those operations would have a dramatic impact on jobs right across Queensland.
There has been very little transparency about what will happen with the extra taxes generated.
The Government has not said what it will do with any extra funds, including whether they will be spend in regional Queensland or in Brisbane.
What we know is that the Government is taking a staggering $4.5 billion in additional royalty taxes this year alone - after saying in their Budget it would only take $800m.
We also know that while the coal price boom won't last forever, the damage to Queensland's reputation as a stable and reliable place to invest will be long lasting.
