Qld coal industry being taxed to death, literally

(c) Warren Mundine – published Courier-Mail
It’s hard to understand why Queensland Labor wants to destroy the coal industry, writes Warren Mundine.
Queensland wouldn’t have a functioning economy without coal. So it’s hard to understand why Queensland Labor wants to destroy the coal industry.
In 2022 the Queensland Labor government introduced a new coal royalties scheme, with progressive rates that increase with coal prices up to 40 per cent, the highest coal royalty rate in the world. In May this year it enacted laws to entrench high royalty rates, that require any future reductions to be passed by Parliament, but allow future royalty increases to be enacted by the stroke of a minister’s pen.
The royalty hikes delivered Queensland a record surplus of over $12 billion in 2023, the largest ever recorded by an Australian state, which Queensland Labor promptly spent heading into an election cycle, including $19bn over four years to support new wind and solar storage and transmission and on power bill rebates for Queenslanders suffering soaring electricity prices driven by Labor’s energy transition policies.
In 2022-23, the royalties and other state taxes paid by the Queensland resources sector increased by 68.4 per cent on the previous year. And when we talk about the Queensland resources sector, understand that we’re mostly talking about coal.
Coal accounts for around 72 per cent of the $116.8bn in gross value added from the Queensland resource sector; coal and gas together, around 84 per cent. Coal accounts for around 70 per cent of the jobs that the Queensland resources sector supports; coal and gas together, around 81 per cent.
Queensland budget papers noted coal royalties depend on coal prices which may go down. But what I couldn’t find any mention of is that coal royalties depend on there being a coal industry in the first place.
The resources sector operates through long term projects that take decades of planning, operation and remediation. These projects can’t be switched on and off quickly when the conditions for doing business in a particular location change. The immediate effect of the royalty hike was a stunning surplus and a government spending spree. The long term effects will be to drive the coal sector out of the state and damage the Queensland economy and regions.
The Queensland Resources Council says the government’s royalty hikes have seen billions of dollars of projects cancelled or postponed.
BHP announced a few months ago that it will cease further investments in Queensland’s coal industry due to the royalty hikes which, together with income taxes, have them paying an adjusted effective tax rate of 62 per cent.
BHP cited the negative impact on investment economics and the increase in sovereign risk due to the decision to raise royalties without consultation as reasons for its decision.
BHP is one of the biggest investors in Queensland’s resources sector. It owns and operates seven metallurgical coal mines in the Bowen Basin and the Hay Point Coal Terminal near Mackay. BMA (which it co-owns with Mitsubishi) is Australia’s largest producer and supplier of seaborne metallurgical coal. It’s ironic since metallurgical coal is essential for the energy transition Queensland Labor talks so much about.
Queensland Labor promotes its policy as providing economic security to Queenslanders. But economic security comes from a strong economy, one that generates jobs and business creation. And Queensland won’t have a functioning economy without coal.
Coal companies support over 372,000 Queensland jobs (30,000 direct jobs, 196,000 jobs in business supply chains and 140,000 jobs induced by the economic effect of that employment).
That’s 13.5 per cent of total state employment. Regional Queensland is disproportionately dependent on the resources sector, and coal in particular.
In 2022-23 in the Mackay and Fitzroy regions, the resources sector (mostly coal) supported around 80 per cent and 50 per cent, respectively, of all regional employment and coal accounted for over 97 per cent and over 80 per cent, respectively, of the billions in direct resources sector spending there.
Queensland Labor’s attack on coal is another example of city elites deserting the regions and ignoring the needs and aspirations of people who live and work there, where alternative employment opportunities are scarce. This is especially so for Indigenous Australians who are disproportionately represented in regional populations.
The Queensland resources sector is a major employer of Indigenous people, who make up 6.4 per cent of the Queensland resources sector workforce, which is above parity. These are high-paying, high-skilled and rewarding jobs that provide opportunities for Indigenous people to prosper.
For every direct job in a Queensland coal company, there are over six jobs in that company’s business supply chain and another 4.5 jobs that supported by the economic activity of those workers. A decline in coal mining will have a profoundly adverse impact on regional Queensland, destroying jobs and increase welfare dependency.
Unemployment and increased welfare dependency lead to socio-economic decline, including increased crime and social dysfunction, problems that already plague parts of regional Australia.
Queensland Labor’s attack on coal will only make things worse for the people who can least afford it during a cost of living crisis, which is the most important issue for Queenslanders and all Australians right now. Queensland Labor is betraying the regions and the workers who have made this state what it is today.
#supportcoaljobs

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