The significant royalty increase from the Queensland Government on the mining and resources sector, live from 1 July, has come under fire by major industry voices, calling the increase extremely disappointing and a “short-sighted grab” that will hinder future investments.
Chief Executive Officer of Minerals Council of Australia, Tania Constable, said it was an extraordinary decision at a time when mining royalties for Queensland have nearly tripled, from $3.3 billion forecasted in 2021-22’s budget to $9 billion.
Mining is the reason the Queensland budget recorded a surplus in 2021-22 worth $1.9 billion, a significant turn-around from the forecast in last year’s budget which expected a $3.5 billion deficit.
Data from the Australian Bureau of Statistics shows the coal industry paid $58 billion in wages over the last ten years.
Coupled with state royalty payments worth $42 billion, the industry has paid over $100 billion to the people of Australia in a decade – nearly 20 per cent more than its operating profits before tax in the same period.
Ms Constable called the 40 per cent royalty on revenue “unprecedented” and said the additional 30 per cent Australian tax on profit makes Queensland the highest taxing mining jurisdiction in the world.
“Quite simply, it’s a breathtaking cash grab that may have serious future consequences for the industry, those employed in it and the businesses and communities that support it,” Ms Constable said.
“Mining creates high paying jobs for thousands of Australians, fosters regional supply chains with over 15,000 local business and supports more than 1,400 community organisations across Queensland.
“The industry pays royalties even when it isn’t profitable and royalties increase when industry conditions improve – as intended.”
Ms Constable said the new royalty rate will have a major impact on a number of planned new mines in Queensland. The state cannot afford to lose this future investment which will reduce job and supply chain opportunities across regional Queensland.
“At a time when Queensland aims to attract investment via its recently released Queensland Resources Industry Development Plan it has wrecked investor confidence with its royalty increase that came with no consultation with the mining industry.
“A reputation as a stable investment destination has been damaged in one announcement and threatens future investment in commodities such as copper, nickel and rare earth elements mines in Queensland.”
Stable and internationally competitive royalty regimes are critical to ensuring mining investment continues to grow and deliver further benefits for all Australians.
The Association of Mining and Exploration Company (AMEC) said the huge increase to royalties was disappointing and announced its opposition to the changes.
Warren Pearce, Chief Executive of AMEC, stated the royalty increase would “ultimately impact investment in Queensland and across the resources sector”.
“This is the third such increase in the last 15 years, which is anticipated to rake a further $1.25 billion into government coffers,” Mr Pearce said.
“Queensland’s coal industry has not only delivered record breaking royalties exceeding $6 billion, the highest amount of royalties ever paid to a Queensland Government, but has been the backbone of Queensland’s post-COVID economic recovery. An outcome that has essentially secured this year’s budget surplus.
“AMEC stands with our coal members in opposition to the coal royalty changes and urges all Queenslanders to consider the important role coal continues to play in our economy.”
Mr Pearce said the royalty rates of 30 per cent and 40 per cent will “certainly make international investors think again before making major new investments in Queensland”.
The exploration initiatives essential for decarbonisation goals
The AEMC did share positive opinions on the funding exploration initiatives provided by the Queensland Government.
“At the exploration end, the increased funding of $17.5 million over the next four years to the Collaborative Exploration Initiative is very welcome news, continued funding for exploration is critical not only to the industry growing, but to delivering the new economy minerals needed for renewable and battery technologies, essential for decarbonisation”.
“AMEC is also pleased that there is a further $10 million in funding for geophysical science and research and $5 million for better defining Queensland’s new economy mineral potential.
“The Queensland Government supporting the METS sector is also encouraging to see, METS funding is essential to creating a modern resources industry and to realising value-adding opportunities here at home.
“We are also pleased to see $5 million to support the Queensland Battery Industry Strategy and would like to see this funding used for the strategy’s implementation to support local and emerging industries using Queensland’s new economy minerals.
A further $15 million has been allocated to support the National Battery Testing Centre. Aligned to this AMEC supports the funding that was previously announced for the Mackay Resources Centre of Excellence.
“Critical to the success of these measures, will be plans to improve regulatory and assessment outcomes for companies.
“There was minimal funding allocated to regulatory efficiency improvement and AMEC believes that this will require a continued and specific focus from the Queensland Government in the coming year,” said Mr Pearce.
