A new report by the Queensland Resources Council (QRC) has revealed damage to the state’s economy following its government’s decision to increase coal royalty taxes to the highest in the world.
According to QRC’s State of the Sector report for the December 2022 quarter, there has been a sharp decline in business confidence in the resources sector over the past 12 months.
QRC chief executive Ian Macfarlane noted that the report shows 60 per cent of resources executives are now less confident about the sector’s future, compared with 10 per cent last year.
The report also reveals that 35 per cent of resources chief executive officers (CEOs) are planning to expand their Queensland operations, compared with 55 per cent last year.
The number of CEOs feeling confident about the sector’s future growth prospects has fallen from 60 per cent to 15 per cent.
Macfarlane said Queensland’s growth pipeline of projects, estimated to be between $103 billion and $142 billion in value, has been placed at risk.
“The rapid decline in confidence in the resources sector’s future prospects over the past 12 months is a direct result of the Queensland Government’s decision to dramatically increase coal royalty tax rates,” Macfarlane said.
“Minerals, metals and refining projects are now at risk of being put on hold or cancelled as resources companies urgently review their investment plans for Queensland.
“Queensland has traditionally been a destination of choice for many large-scale, long-term resources investors because of its relatively stable and consistent regulatory environment, but that competitive advantage has now been lost.”
In a recent shareholder Q&A, BHP president Australia Geraldine Slattery expressed a similar sentiment, saying the coal royalty system called the competitiveness of investing in Queensland into question.
Much like the QRC, Slattery questioned the speed with which the royalty system was put in place.
“What you have then is a market intervention that’s both quite suddenly applied and equally calls into question for the stability of investing in Queensland,” Slattery said.
“Why does this matter? Ultimately, the competitiveness of Australia’s mining sector relative to our global peers is incredibly important.
“The returns that come from those investments go right back into the Australian economy, to communities, to governments, to employees, to partners and to shareholders.”