Why you should care about coal royalty rates
Posted on August 1st, 2023
A message from Ian Macfarlane, Chief Executive, Queensland Resources Council:
I’ve been asked a few times recently, why should anyone outside the resources sector care about coal royalty rates? The answer is simple – the economic future of Rockhampton and the Capricorn Coast, and by that, I mean jobs and business opportunities, depends on Queensland’s largest export industry remaining competitive. If royalty taxes are too high or are suddenly increased without any warning, as is the case in Queensland, then coal companies stop investing here and look to opportunities in other states and countries.
As they say, when the coal industry sneezes, the Queensland economy catches a cold. So, an investment freeze is bad news for the Queensland economy. Not investing in coal mines is a bit like not servicing your car – you can get away with it for a while, but it’s always going to end badly.
Queensland’s coal royalty increase has created new risks for a pipeline of $100 billion in resources and energy projects including renewables, hydrogen and critical minerals.
Here are some fast facts about coal royalties.
1. Queensland already had the highest coal royalty rates in Australia before the increase. Last year’s budget saw the Treasurer add three new higher royalty rates on top of the existing coal royalty rates. Queensland’s top coal royalty rate is now forty per cent (40%), which is five times the highest royalty rate in NSW.
Graph 1: Queensland has gone from having the highest coal royalty rate in Australia to the highest coal royalty rate in the world. Does that keep Queensland competitive?
2. Royalty revenues have risen sharply. The existing coal royalty tiers would have delivered a record return to Queenslanders under the previous system, without the need for new tiers that take Queensland’s royalty rates to the highest in the world, which in turn risks future investment.
3. Royalties are a major source of revenue for Queensland. Royalties underpin the Queensland budget and deliver for all Queenslanders. That’s why having the right royalty rate is critical. If royalty rates are too high and investments are lost, Queensland loses jobs, new projects and future royalties. Projects that don’t proceed, don’t ever pay royalties, which means we all miss out. The loss of investment hurts regional Queensland the most, with fewer jobs and the loss of opportunities throughout the supply chain. Small businesses in Central Queensland are already warning about those risks to their future plans.
For more information on royalties, please visit – https://www.keepqldcompetitive.com.au/news
