Queensland Government Tells Miners to Stop Complaining About Sky High Royalties

Queensland Treasurer Cameron Dick has announced the approval for the proposed merger between QSuper and Sunsuper on March 15 2020. (Jono Searle/Getty Images)

The government of the Australian state of Queensland has criticised local mining companies for launching a pre-budget media campaign to protest the state’s sky-high royalty regime, telling them to “respect” struggling households.

This comes after the Queensland Labor government introduced a three-tiered coal royalties system in July 2022 to capitalise on record coal prices in the global market, resulting in mining companies in the state being subject to one of the highest coal tariffs worldwide.

The state government has unwaveringly defended its royalty policy while expecting to get extra billions of dollars in revenue from the taxes.

Queensland Miners Push Back Against State’s Royalty Policy

On June 12, the Queensland Resources Council, a peak industry body, announced that it had launched an advertising campaign to raise awareness about the negative impact of the state government’s coal tax reform on new investment and jobs in the sector.

The council warned that two billion dollars (US$1.35 billion) worth of investment in the coal industry had been cancelled due to the royalty surges and that a pipeline of new projects worth more than $100 billion could be at risk if the Queensland government kept pursuing high taxes.

In May, the council estimated that the new royalty scheme could add $5 billion to the state budget’s bottom line in the 2022-2023 financial year.

“When the investment rules change so drastically and so suddenly as they did when the world’s highest coal royalty was introduced in Queensland last year,” council CEO Ian Macfarlane said.

“That’s a wake-up call for investors in all resources projects who have reason to rethink whether Queensland is the best place to invest.”

A bucket-wheel dumping soil and sand removed from another area of the mine in Newcastle, Australia, the world's largest coal exporting port, on Nov. 5, 2021. (Saeed Khan/AFP via Getty Images)

The CEO noted that the withdrawal of investments in the sector would lead to the loss of new jobs amid the current challenging economic conditions.

“At a time when the cost of living is increasing, and mortgage rates are on the rise, the best security people can have is a job, which is what the resources sector can provide,” he said.

“A stable and competitive royalty system that’s attractive to investors is also more likely to deliver consistent royalty tax returns that allow for long-term investments in hospitals, roads, schools and new energy infrastructure.

“This short-sighted tax grab hurts Queensland in the long run, because it costs us new projects and new jobs. Regional Queenslanders pay an especially high price with the loss of infrastructure, services and the job-creating projects of the future.”

Local mining companies are not the only critics of Queensland’s coal royalty reform, as foreign entities also voiced their objections.

In July 2022, Japan’s ambassador to Australia, Yamagami Shingo, who represented Japanese companies, warned that the massive coal royalty tax could push away Japanese investors and undermine the decades-long partnership between the two countries.

Queensland Government’s Response

Following the Queensland Resources Council’s announcement, state Treasurer Cameron Dick said the coal industry should show respect to people suffering from high inflation and mortgage rates.

“People are doing it tough in Queensland, and I don’t think Queenslanders want to hear complaints from the coal lobby and from the mining lobby about paying a little bit more tax when they are making record profits and their revenue is through the roof,” he told reporters.

A photo shows part of the coal operations at the Port of Newcastle in New South Wales, Australia, on Nov. 18, 2015. (William West/AFP via Getty Images)

The treasurer also noted that Queensland remained one of the most competitive places in the world for the coal industry, with record levels of investment.

“The number of jobs in the coal industry in Queensland has grown since progressive coal royalties were announced,” he said.

At the same time, Dick stated that the Queensland government would not back down from its policy as he believed he had the support of the state’s residents.

“The people of Queensland are on our side,” he said, reported the Australian Financial Review.

“The people of our state understand that at times of historically high prices for coal, we introduced progressive coal royalties to ensure they get a fair share of that benefit.”

State Government Announces $8.2 Billion Living Cost Package

Following Dick’s remarks, the Queensland government has unveiled an $8.2 billion cost of living relief for local households.

Under the package, all Queensland households will receive a $500 rebate on electricity bills in the 2023-2024 financial year, while 205,000 small businesses will see their bills slashed by $650.

The government will also provide 15 hours of free kindergarten per week for all 4-year-old children in the state, starting from January 2024.

The measure is expected to save Queensland families with young children up to $4,600 in childcare costs per year.

Other types of relief include support payments for children’s swimming lessons and school breakfast programs in areas experiencing hardship, as well as accommodation and fuel subsidies for regional Queensland patients who need to travel to access essential healthcare services.