Carbon tax to cost QLD $1 billion in lost royalties

Queensland Resources Council CEO Michael Roche has told a Senate Committee hearing that it has ignored a $1 billion coal royalty loss due to the carbon tax.

Queensland Resources Council CEO Michael Roche has told a Senate Committee hearing that it has ignored a $1 billion coal royalty loss due to the carbon tax.

Roche said that he was “puzzled by the state government’s failure to highlight losses of $1 billion in coal royalties as a result of the federal government’s proposed carbon tax”.

Speaking to the Senate Select Committee on the Scrutiny of New Taxes, he said that an independent analysis by ACIL Tasman showed that 2700 QLD coal miners would be out of a job as soon as 2018 due to the premature closure of gassy or low margin mines.

“Assuming a four times indirect employment multiplier, this means the loss of 13,000 Queensland jobs,” he told the committee.

“For the Queensland Government the foregone royalties of these coal mine closures will be significant with ACIL Tasman estimating a cumulative reduction in Queensland coal production 120 million tonnes by 2020-21, which equates to the loss of $1 billion in coal royalties.

“I must admit I don’t understand why our state government is not highlighting this impact on the state’s finances.”

Roche went on to say a tax on ‘fugitive emissions’ was the main culprit, adding that the Centre for International Economics has confirmed that none of Australia’s coal export competitors apply a carbon price on fugitive emissions as “they can’t be measured accurately nor effectively abated”.

However, the Prime Minister has refuted these claims.

Mining’s bright future

PM Julia Gillard recently stated that “workers they could be sure they would have a job for decades to come in the coal mining industry, and even said their sons could confidently follow in their footsteps”.

Visiting a NSW coal mine, she reassured miners that “there’s a great future in coal mining”.

Climate change minister Greg Combet backed up Gillard’s comments, stating “the simple fact is that the coal industry has a very bright future in Australia and will be supported as we introduce a carbon price by the Government’s $1.3 billion Coals Sector Jobs Package”.

Combet also hit out at the survey by ACIL Tasman, saying that it did not take into account the $1.3 billion in assistance to provide support jobs under the Coal Sector Jobs Package.

Power generators hit

Roche also took the opportunity to tell the Senate that it is not just coal miners, but also the coal fired power sector that is at risk, as it will not receive support under the Government’s package.

“No Queensland black coal-fired electricity generator – public or private – is expected to receive compensation from the federal government for a reduction in their profits, equity and asset value loss associated with meeting their carbon permit liabilities,” he said.

”Even with 80-90 percent cost pass through, it is estimated that the asset values of Queensland taxpayer-owned black-coal generation assets will decrease $1.7 billion – roughly a quarter of their value.

“Queensland taxpayers will experience a loss of asset value in the generators they own of some $400 per person.”

The NSW Government is also considering the closure of coal fired power plants on the back of the Federal Government’s plan to pay some power stations to shut down under the carbon tax.

Likely targets for the paid closure are the power stations at Lake Munmorah on the Central Coast and Liddell power station near Muswellbrook, as they are the oldest and highest polluting in the state.

The combined greenhouse gas emissions from these two power stations are approximately eight million tonnes annually.

When asked if the Munmorah power station would be paid to close, NSW premier Barry O’Farrell told the Herald he was “getting advice from the Treasury. Broadly, the carbon tax is not good for NSW”.

“It will affect jobs, it will push prices up and whilst the compensation package announced is a one off, what we know about carbon tax is that it will continue to increase.”

Roche said the only real abatement option for a black coal-fired generator was the commercialisation of carbon capture and storage technology, which he noted did not receive any additional funding in the package accompanying the carbon tax announcement.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.