The windfall far exceeds numbers forecast ahead of the Queensland mid-year budget.
Queensland’s controversial three-tiered coal royalties system started on July 1, hitting producers with a 40 per cent tax on all coal prices of more than $300 a tonne.
The two accompanying tiers enforce a 20 per cent tax on coal above $175 and a 30 per cent tax on coal above $225, a reality that has left many majors pushing back on the proposal.
BHP is one of companies that has indicated it will reassess plans to invest in the state due to the implementation of the royalties.
The Queensland mid-year budget revealed the State Government had earned a surplus of $5.18 billion, due in large part to higher coal and petroleum royalties. The Government reassured that the unexpectedly large sum was caused by “higher-than-expected, but temporary, global coal and oil prices” sparked from the ongoing war in Ukraine.
Initial forecasts made by the State Government set the estimated royalty surplus to $1.2 billion, which ended up being raised to $3 billion.
Royalties are expected to provide a $27.3 billion buffer by 2025 –26, up just shy of $6.5 billion compared to the June budget’s earlier prediction. Out of this total, $21.5 billion is expected to be from coal alone.
Queensland Treasurer Cameron Dick warned that the high prices of coal are not to be trusted in the long term.
“Geopolitical instability poses a threat to continued growth,” Dick said. “Coal prices are unlikely to remain at these inflated levels and unemployment is likely to rise next year.”
Until then, the Treasurer has every intention to commit all royalty proceeds to regional Queensland.
“We’ve secured a big win for Queensland by securing a share of the windfall profits made by coal companies,” Dick said. “These additional funds will be important to ensure Queenslanders are well prepared for the tougher times ahead.
“This shows that coal royalties are worth fighting for, delivering a fair share for Queenslanders.”
The Australian Bureau of Statistics (ABS) shared data revealing the value of Queensland coal exports almost tripled in 2021–22. The 190 per cent increase resulted in growth from $24.7 billion to a record high of $71.8 billion.
The state budget report suggests that measures are being taken to account for the expected reduction of coal and oil prices heading into the next financial year.
“The primary factor for the improved revenues outlook is upward revisions to coal and petroleum royalties,” the report stated.
“In addition, a weaker Australian dollar has meant the revenues to Queensland, from sales occurring in US dollars, were higher.
“The upward revision to key revenues beyond 2023–24 is more modest, reflecting the expected reduction of coal and oil prices over time.”
Despite the more than doubling of expected income, the state’s treasurer justified the changes with the state’s larger contribution to the rest of the country.
“Our electrons run south to support many parts of the country,” Dick said. “We just don’t want Queensland to be worse off.
“We want to make sure that we aren’t disadvantaged by southern states that have failed to properly and responsible prop up their own natural resources.”