The Federal Government has threatened to cut infrastructure funding for Queensland after the State Government announced plans to increase coal royalties.
Queensland Treasurer Tim Nicholls said the move was expected to raise $1.6 billion over four years and Federal Treasurer Wayne Swan would be "petty and spiteful" to withdraw funding because of the policy.
Under the mining tax legislation the Commonwealth has agreed to reimburse mining companies for state royalties.
Whilst Swan is yet to officially comment on the QLD policy he has made a number of threats to state governments previously, and warned any move to hike royalties would result in less federal cash for the states.
Under the new QLD changes the royalty rate will rise from ten per cent to 12.5 per cent for coal sold between $100 and $150 a tonne.
Miners will also be forced to pay a 15 per cent rate on anything sold over $150 a tonne.
AAP reports the Greens have announced plans to introduce a private member's bill to prevent the Commonwealth from reimbursing companies for state royalties.
Greens leader Christine Milne said the bill would prevent state governments from rorting the mining tax system.
"Until this loophole is closed, Campbell Newman, [WA Premier] Colin Barnett and Co can lift state mining royalties as high as they like in the full knowledge that it is the commonwealth government who will foot the bill," she said.