New progressive royalty rates for Queensland coal will support new investment in regional hospitals, reflecting unprecedented pricing and revenues being collected by multinational coal companies.
Treasurer Cameron Dick said the change follows a 10-year royalty freeze for coal royalties, the longest pause in royalty arrangements in modern Queensland history.
“Multinational coal companies have enjoyed an extraordinary period of stability in Queensland’s coal royalty regime, thanks to the Palaszczuk Government’s extended freeze on coal royalties.
“However, with the freeze expiring on 30 June 2022, the existing rates do not account for the unprecedented windfall prices that coal producers are now receiving.
“Our existing coal royalty tiers were primarily designed for lower coal prices, with a top tier at $150 per tonne, with royalties charged at 15 per cent.
“However, with coal recently trading at over A$500 per tonne, our current rate structure is clearly no longer fit for purpose.”
Mr Dick said that, to reflect the new price levels being achieved, three new progressive coal tiers would be introduced on 1 July 2022.
The new rates will be 20 per cent for prices above A$175, 30 per cent for prices above A$225, and a 40 per cent tier that would apply when prices exceed A$300.
“Importantly, the higher tiers only take effect on the portion of the royalty price above the relevant price,” he said.
“For example, if coal prices are A$302 per tonne, a very high price by usual standards, the 40 per cent tier will only apply to the $2 portion.”
Mr Dick said the new progressive royalty regime will minimise impacts on the coal industry.
“Based on export values and volumes over the past 10 years, average prices for hard coking coal – the metallurgical coal used for steelmaking – have exceeded the new tier of A$175 per tonne for only half that time, while average thermal coal prices have only exceeded A$175 in recent months, for the first time ever,” he said.
“These changes mean coal producers can rest easy knowing they will not be hit with higher royalties when prices are low and the industry is struggling.
“Importantly, during period of low prices, Queensland royalty rates will be lower than those charged in New South Wales.
“This compares to the 2012 change by the LNP, which increased existing rates in 2012, when prices were falling.”
Mr Dick said the additional impact of the royalty change would be less than the change made in 2012 by the LNP.
“When Tim Nicholls and the LNP Government jacked up coal royalties, during a tough time for industry, he predicted he would take $1.6 billion out of the industry,” he said.
“By comparison, these new progressive coal royalties will raise $400 million less, at $1.2 billion, during a boom time.
“Importantly, we will be investing all of this money, and more, in delivering better infrastructure for regional Queensland.
“The budget provides more than $4 billion dedicated to hospitals in regional Queensland, including a new hospital for Moranbah, and major expansions for Mackay, Townsville and Cairns.
“These changes will mean more money to regional Queensland, instead of flowing interstate or overseas as windfall profits,” he said.
“The 2022-23 Budget will also invest in supporting the future of the resources sector through the Queensland Resources Industry Development Plan that will unlock new resources and drive Queensland’s new economy minerals industry.”
