The future of regional communities throughout the Bowen Basin is at risk from the State Government’s new royalty tax tiers, which are set to cost coal producers six times more this financial year than predicted in last year’s state budget, the Queensland Resources Council (QRC) said today.
Speaking from Moranbah, where Bowen Coking Coal will officially re-open its Burton Mine Complex today, QRC Chief Executive Ian Macfarlane said the scale of the sudden state royalty tax hike is already impacting decisions about resources investment and jobs across the state.
“It’s great to be here at the Burton Mine, but the fact remains this investment decision was made before the Queensland Government’s shock royalty increase,” he said,” he said.
“Queenslanders should be in no doubt there will be fewer jobs and less investment in the future because we now have the highest royalty rates in the world, which has seriously undermined our sector’s international competitiveness.”
Last year, the Queensland Government announced it would add three higher tiers to the state’s royalty tax system, costing coal producers an estimated extra $800 million in 2022/23.
The latest price forecast from the Office of the Chief Economist suggests the amount will be closer to an extra $5 billion, bringing the total amount of coal royalties paid by coal companies this financial year to an unprecedented $13 billion.
Mr Macfarlane said taking this amount of money out of the sector in a one-year period is a huge disincentive for companies to continue to invest in Queensland.
“Queensland royalty taxes are now the highest in the world, and our top rate is five times higher than in New South Wales,” he said.
“Alarm bells should be ringing for the State Government and for every Queenslander. No industry can withstand such a heavy-handed and sudden tax impost, not even an industry as resilient and significant to the Queensland economy as the coal sector, which represents about 60 per cent of our exports.”
Last month, BHP confirmed it will not make any significant new investments in Queensland while the higher tax regime is in place, and Glencore has cited higher royalties as a factor in its decision not to proceed with its $2 billion Valeria project.
Mr Macfarlane said mining companies operating throughout the Bowen Basin, where Queensland’s coal sector is largely based, have long been the driving force behind the Queensland economy.
Statewide, the resources sector contributed $94.6 billion to the Queensland economy last year, supported the jobs of 450,000-plus people and spent more than $27 billion across 14,000 businesses in its supply chain.
“The frustrating reality is that before the new tax tiers were introduced, coal companies would have still contributed a record $8.3 billion in royalties to the state budget this financial year because coal prices have been so strong,” Mr Macfarlane said.
“When prices are high, the amount of royalties paid by companies increases. That’s how the previous system worked, and it was working well for Queensland.
“There is no justification for the government to step in and throw Queensland’s investment environment into chaos.”
MR Macfarlane said the full impact of the government’s sudden change in economic policy will be felt in five to 10 years, when the pipeline of new investment in large-scale, long-term resources projects is not there to take over from projects that have reached their end of mine life.
