The Queensland Resources Council (QRC) today called on the Palaszczuk Government to review its decision to increase state coal royalty taxes to the highest rates in the world, in the wake of a period of tax increases based on no consultation by the government.
Mr Macfarlane said the shelving by the government of its new state land tax regime – when faced with the reality about its impact on Queenslanders – was a good decision and should be closely followed by an announcement of a review of its much-criticised new coal royalty tax regime.
He said Queensland is the rank outlier in the world in terms of coal royalty rates.
“Earlier this year, and almost overnight, the State Government increased Queensland’s top coal royalty tax rate from 15 percent to 40 percent, which is 43 percent higher than the next nearest rate of 28 percent, and nearly four times higher than the average highest rate globally,” Mr Macfarlane said.
“This is an outrageous impost on our industry, which was done with no consultation or consideration of the damage this will do to regional communities, which rely so heavily on the employment and business opportunities that come from the resources sector.
People’s lives and livelihoods will be decimated if there is a downturn in our industry, not to mention the diabolical impact on the state economy if resources companies decide to switch their investment focus away from Queensland.”
A report released last week by independent analysts Commodity Insights found the new top royalty rate for Queensland’s metallurgical coal is now 2.7 times higher than the nearest competitor, and almost five times the global average.
Mr Macfarlane said there is widespread alarm in Queensland and overseas about the impact of the new and extraordinarily high coal royalty taxes, which has severely damaged the industry’s reputation with international investors.
“Australia’s biggest miner BHP has put all plans to invest in Queensland on hold as a result of the royalty hike and there will be more companies announcing changes to their investment and employment plans to come,” he said.
“The government’s decision to suddenly double the amount of tax to be paid by coal producers this financial year compared to last year – from $7.3 billion to $12.4 billion forecast for 2022-23 according to Commodity Insights – has dramatically increased production costs and harmed our industry’s ability to compete internationally for customers.
International commodity prices may be high right now, but as any exporter knows, we need the good times to balance out the bad, when prices are low or even below the cost of production,” he said.
It’s not that long ago, such as in 2020, that coal prices were below the cost of production and some miners were losing money.
On top of that, regardless of where coal prices are on any given day, companies’ fixed costs like fuel, labour and other consumables are rising every year due to inflation. It’s a challenge every business is facing and resources companies are no different.
This doesn’t seem to have been taken into account when the government decided to unilaterally increase taxes on our sector.”