NSW has no plans to introduce coal royalties

New South Wales has indicated it will not follow Queensland’s lead on coal royalties, despite experts suggesting such a decision represents “a massive missed opportunity” for the state’s taxpayers.  

Analysis conducted by consultancy firm Climate Energy Finance (CEF) has shown NSW could have potentially hauled in $23 billion in royalties this year – more than double the state’s budget deficit – had it implemented a tiered system similar to the one in place in Queensland. 

CEF director Tim Buckley believes NSW is well positioned to take advantage of soaring coal prices. 

“The NSW budget deficit is around $11 billion. They could wipe that out and still have (billions of dollars) to spend on communities that need to transition away from coal mining,” he said. 

Despite the potential windfall for NSW, neither side of politics party has shown any appetite for implementing coal royalties.  

The current State Government left its royalty rate for coal unchanged when Queensland introduced its system in June, while NSW opposition leader Chris Minns has ruled out a new policy. 

“We’re not proposing that as a policy response in NSW,” he said. “It’s important to note that we’re already the highest taxing state of any jurisdiction in any part of the country … we need to make sure that we’re not putting added burden on business or the economy at a fragile time.” 

Queensland’s coal royalties have been extremely controversial. Under the three-tiered system, the royalty rates are 20 per cent for coal prices above $175 per tonne, 30 per cent for prices above $225 per tonne, and a 40 per cent tier that would apply when prices exceed $300 tonne. 

According to Trading Economics, Newcastle coal futures – considered the benchmark for coal prices in Asia – were hovering around $US440 ($659) per tonne on Wednesday September 21. 

Queensland Resources Council (QRC) chief executive Ian Macfarlane has been especially critical of the decision, saying at the time it was implemented that it would “make Queensland’s number one export industry and private sector employer less internationally competitive”. 

“This tax grab has been developed behind closed doors and without consultation with industry,” he said. “It’s a kick in the guts and not a fair deal for the resources sector, which has kept the Queensland economy afloat during the pandemic by supporting jobs and businesses throughout the state.” 

Since the introduction of the tiered system, BHP chief executive officer Mike Henry made it clear the company was “reassessing” its investments in Queensland coal.  

In addition, a recent QRC report found the decision would lead to greater unemployment in the state’s mining sector. Another report released this week found that the Queensland Government severely underestimated the impact on the state’s coal export sector as it used “extremely conservative and unrealistic coal price forecasts”. 

“As a result, they massively understate the revenue collection by the government and the cost impost placed on the sector,” the report, conducted by independent analysts Commodity Insights and commissioned by the QRC, stated.  

“The royalties also clearly reduce the competitiveness of the Queensland coal export sector relative to its competitors by sharply increasing the cost structure.” 


Editor of industrial titles and mastheads with Prime Creative Media. Publications include Rail Express and Australian Mining (web content).
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