The Queensland Resources Council (QRC) has accused the Queensland Government of underestimating the impact of increased royalty taxes on Queensland’s coal sector in a QRC-commissioned report from Commodity Insights.
The report reviewed the impact of the State Government’s decision to add three new coal tax tiers – with significantly higher royalty rates – to the previous regime, stating that:
“The royalty revenue forecasts from the Treasury are based on extremely conservative and unrealistic, in our opinion coal price forecasts.
“As a result, they massively understate the revenue collection by the government and the cost impost placed on the sector.
“The royalties also clearly reduce the competitiveness of the Queensland coal export sector relative to its competitors by sharply increasing the cost structure.”
The report also suggested that the new top royalty rate for metallurgical coal is now more than double the nearest competitor and almost five times the global average, confirming widespread industry alarm at the new tax rates is well justified.
QRC chief executive, Ian Macfarlane, said the government’s move to suddenly double the amount of tax to be paid by coal producers has dramatically increased companies’ production costs and harmed the industry’s ability to compete internationally for customers.
“International commodity prices may be high right now, but as any exporter knows, we need the good times to balance out the bad, when prices are low or even below the cost of production,” he said.
“It wasn’t that long ago, such as in 2020, that coal prices were below the cost of production and some miners were losing money.
“On top of that, regardless of where coal prices are on any given day, companies’ fixed costs like fuel, labour and other consumables are rising every year due to inflation, which is a challenge every business is facing.
“The new royalty regime is another cost impost that will need to be absorbed if Queensland companies are to remain internationally competitive, which means budget cuts will have to be made elsewhere.
“It’s pretty simple – resources companies paying higher tax bills have less money to spend on developing new projects or expanding operations, or on rehabilitation programs, upgrading plant and equipment, investing in low emissions technology or employing more people.
“The State Government’s cash-grab to balance its own budget hurts local suppliers and employment opportunities, and means companies will also have less money to support charities and sports clubs, which they do very generously.”
Mr Macfarlane said the ill-considered move by the Queensland Government will hurt regional communities as well as people living in the city – anyone whose jobs and businesses rely on the continuing prosperity of the state’s minerals and energy sector.
“BHP has already paused future investment in Queensland as a direct result of the royalty hike, which is shocking in itself,” he said.
The QRC Commissioned report by Commodity Insights is available in full, here.
