The Queensland Government’s decision to impose the world’s highest royalty taxes on the resources sector will hit regional communities and businesses hard, as companies are forced to rethink their future investment and employment plans.
Queensland Resources Council (QRC) Chief Executive Ian Macfarlane said the industry is reeling from the addition of an extra three tiers of royalty taxes on coal, representing a huge cost increase to producers based on current prices.
“This decision from the government will have a flow-on effect on the cost of living through higher electricity prices, higher construction costs and higher-priced consumer goods that will add to inflation and impact every Queenslander,” Mr Macfarlane said.
“This is a seriously misguided economic policy that will make Queensland’s number one export industry and private sector employer less internationally competitive.”
Mr Macfarlane said the decision to increase royalty taxes to fix a hole in the budget is a short-term, political move with long-term consequences for a major, wealth-creating sector of the Queensland economy.
“This tax grab has been developed behind closed doors and without consultation with industry. It’s a kick in the guts and not a fair deal for the resources sector, which has kept the Queensland economy afloat during the pandemic by supporting jobs and businesses throughout the state,” he said.
“Regional resources communities have every right to ask this Government why their jobs and the economic prosperity of their towns should be put on the line for the sake of a short-term budget fix.
“The Queensland resources sector already pays the highest royalty taxes in Australia, double that of NSW, and will now pay the highest rates in the world.
“Under the existing arrangements, as our commodity prices go up, so too do the royalties we pay into the state budget, which means every Queenslander benefits from our prosperity.
“That’s why this year, royalty taxes paid by the coal industry is an all-time record and four times last year’s payments.”
Mr Macfarlane said resources companies are just like any business – higher taxes mean less profit, which means less investment and fewer jobs in the future.
“What the government also isn’t telling people is that because of the GST equalisation process, 80 percent of the extra royalties raised will be redirected to Canberra over the next five years anyway.
“So, the net economic benefit for Queensland will be minimal but the potential damage to our industry and the Queensland economy could be major.”
Mr Macfarlane said Queensland’s resources sector contributed a record $84.3 billion to the state economy last financial year through the flow-on effects of industry spending. It also supports the jobs of more than 422,000 people.
“Resources employees – who earn the highest, average income out of any sector in Australia – all pay income tax as do the 15,000-plus businesses in our sector’s supply chain. Resources companies are also Australia’s biggest company taxpayer,” he said.
“In total, this financial year, Queensland’s resources sector will pay more than $8 billion in royalty taxes into the state budget because of higher commodity prices, which is more than three times the amount companies paid last year.
“That’s why we say ‘when the resources sector is doing well, so is Queensland’, because the amount of royalty taxes our industry pays into the state budget goes up when prices go up – that’s how the system works.”