The State Government’s new royalty tax tiers are set to cost coal producers six times more this financial year than predicted in last year’s state budget, according to the Queensland Resources Council (QRC).
QRC Chief Executive Ian Macfarlane said the scale of the sudden state royalty tax hike is already impacting decisions about resources investment and jobs across the state.
Last year, the Queensland Government announced it would add three higher tiers to the state’s royalty tax system, costing coal producers an estimated extra $800 million in 2022/23.
The latest price forecast from the Office of the Chief Economist suggests the amount will be closer to an extra $5 billion, bringing the total amount of coal royalties paid by coal companies this financial year to an unprecedented $13 billion.
Mr Macfarlane said taking this amount of money out of the sector in a one-year period is a huge disincentive for companies to continue to invest in Queensland.
“Queensland royalty taxes are now the highest in the world, and our top rate is five times higher than in New South Wales,” he said.
“No industry can withstand such a heavy-handed and sudden tax impost, not even an industry as resilient and significant to the Queensland economy as the coal sector, which represents about 60 per cent of our exports.”
Last month, BHP confirmed it will not make any significant new investments in Queensland while the higher tax regime is in place, and Glencore has cited higher royalties as a factor in its decision not to proceed with its $2 billion Valeria project.
Mr Macfarlane said before the new tax tiers were introduced, coal companies would have still contributed a record $8.3 billion in royalties to the state budget this financial year because coal prices have been so strong.
“There is no justification for the government to step in and throw Queensland’s investment environment into chaos.”
MR Macfarlane said the full impact of the government’s sudden change in economic policy will be felt in five to 10 years, when the pipeline of new investment in large-scale, long-term resources projects is not there to take over from projects that have reached their end of mine life.
