The Queensland Government’s decision to impose the world’s highest rates of coal royalty taxes on the resources sector will hit the state economy much harder than the Treasurer is predicting, the Queensland Resources Council (QRC) said today.
QRC Chief Executive Ian Macfarlane said independent market analysts such as OCE, AME and Consensus Economics do not expect coal prices to fall as quickly as Treasury figures reflect.
“If prices remain steady, the new royalty tax rates mean coal producers will pay a total of almost $15 billion in royalties to the Queensland Government in 2022/23 – this is double what they paid in the 2021/22 financial year on the same value of coal produced,” he said.
“No-one would expect to pay double the rate of income tax they paid last year, and the same goes for resources operators.”
Mr Macfarlane said that under the previous royalty rates, as commodity prices rose, so too did the value of royalty taxes collected by the State Government, giving Queenslanders a fair share of the increased value of resources.
“The total state royalty taxes paid by resources operators to the government this financial year is three times higher than last year – an extra $6 billion,” he said.
“That’s how the royalty system works – when commodity prices rise, we pay more. That was the basis upon which investment decisions were made – not on the basis of a new tax grab developed behind closed doors.”
Mr Macfarlane said the government’s decision to astronomically increase the amount of tax paid by the resources sector was an attack on resources communities and regional Queenslanders, who had kept the state economy strong and stable throughout Covid.
“Just like any business, mining operations are set up based on a certain cost structure, so to meet next year’s tax bill, they will now have to make some hard decisions to cut costs, which means cutting back or cancelling projects and cutting back on jobs,” he said.
”Regional jobs will be the first to go. The resources sector’s supply chain is far-reaching and multi-layered, so there will be no Queensland region unaffected by this ill-considered decision."
“At a time when the Queensland Government has been spruiking its credentials as an international investment destination for green energy projects like hydrogen and critical minerals, this is the worst move it could have made."
“Companies which invest in resources projects are likely to be the same companies interested in diversifying into critical minerals, hydrogen and renewable energy projects, but there’s now a black mark against Queensland as a safe place to invest."
“Since announcing the royalty tax increase in the Budget, Treasurer Cameron Dick has made it clear that if you come and invest in Queensland and make a profit, the Queensland Government is going to tax you higher and harder."
“You can’t just impose massive new tax hikes on a sector overnight and not expect there to be consequences. Those consequences start with the loss of jobs in regional Queensland and then flow through the whole state."
“The decision to over-tax a highly productive sector of the economy – which supports the jobs of more than 422,000 people and contributed $84.3 billion to the state economy last year – is a serious misstep by the Queensland Government and will have long-term consequences,” he said.