The Queensland Treasurer’s pre-budget 43% hike in coal royalties is a ‘smash and grab’ raid for short-term cash at the expense of long-term economic security according to Queensland Resources Council chief executive Michael Roche.
“What we are seeing under the disguise of higher financial returns to Queenslanders is an assault on the state’s capacity to benefit from the coal industry’s long-term momentum that the Premier openly acknowledges is underpinning the economy,” he said.
“The Treasurer’s own calculations reveal the opportunistic nature of this raid, as over time, the windfall from the tax hike is eaten away by reduced funding for Queensland through the Commonwealth Grants Commission.
“In other words, a large percentage of the additional coal royalties collected in Queensland will end up in the coffers of other state governments as the Grants Commission adjusts its allocations to take into account this hike in Queensland royalties.”
Based on the existing rate of 7%, Queensland’s coal industry was already forecast to deliver a doubling of royalty revenues to at least $2.5 billion in 2008-09, with up to $3 billion possible through production expansions.
“The state’s budget predicament is so dire that a doubling of coal revenues is not enough,” he said.
According to Roche, as well as paying a royalty on the value of coal mined, the state government also collected a royalty on freight costs, a service at this time monopolised by the state-owned Queensland Rail.
“This super-royalty was imposed in 2002 when the state budget was also in trouble,” he said.
“What most people do not realise is that over the past four years, coal companies have directly underwritten more than $7 billion investment in the state’s rail and port infrastructure capacity.
“The bottom line is that the coal industry pays for its infrastructure, and as a consequence, taxpayers have a right to know what’s been happening to the billions in royalties that have been collected by the state government in recent years.
“Not a single cent of the state’s mineral royalties has paid for any of the essential rail, port or water infrastructure used by mining companies.”
Roche said while it was no secret that the coal industry is enjoying a healthy price outlook, companies were also making record-level business and social infrastructure investments throughout central and southern Queensland.
“This new super tax on coal fails to take into account that every single cost associated with production — from labour to energy and housing, is escalating and for an industry that has never shirked from paying its way, this cash raid by the state government will only dilute Queensland’s ability to stay internationally competitive.”
Queensland Resources Council