The Palaszczuk Government has reached a new low by launching a taxpayer-funded advertising campaign to try and justify its decision to impose excessive new royalty taxes on the resources sector, the Queensland Resources Council (QRC) said today.
QRC Chief Executive Ian Macfarlane said the ads are misleading and designed to make Queenslanders think resources companies are not already fairly sharing their profits, when nothing could be further from the truth.
“The resources sector is made up of private and public companies, both local and international, which invest millions – in many cases billions – of dollars into resources assets in Queensland,” Mr Macfarlane said.
“In return, resources companies pay hefty state royalty taxes – which automatically increase as commodity prices go up – as well as federal company tax. According to Australian Tax Office data, nationally the resources sector pays more company tax than any other sector.
“Our sector also supports the jobs of more than 422,000 people in Queensland and generates enormous, ongoing opportunities for the 15,000 businesses we work with throughout our supply chains.
“In total, our industry contributed a record $84.3 billion to the state economy in 2020-21. Last year, the industry paid a record $9 billion in royalties because of higher royalty prices.
“As the global pandemic clearly demonstrated, the resources sector has held up the Queensland economy and kept our mines going and people in jobs throughout this entire period.
“It is a huge insult to the companies operating and investing in Queensland to now hear the State Government talking down our contribution in an attempt to justify hitting us with the world’s highest coal royalty tax rates.”
Based on the latest forecasts by Australia’s Chief Economist, the Queensland Government will rip an extra $6.7 billion out of the state’s coal sector in new royalty taxes over the next 12 months.
This is over and above the record $9.4 billion that would have been collected under the previous royalty regime and means producers will pay a staggering $16.1 billion in coal royalties to the State Government this year.
The extra $6.7 billion is 8 times more than the $765 million in coal royalties Treasurer Cameron Dick is claiming the new tax tiers will cost coal producers.
Mr Macfarlane said once gas and metal royalties are included, the total amount of resources royalties to be collected by the Queensland Government in 2022/23 will reach $18.3 billion.
“This is an excessive level of taxation that is unprecedented and completely unsustainable – it will kill the golden goose that has supported Queensland throughout Covid and which continues to underpin our entire state economy,” he said.
“By increasing coal royalty rates to the highest levels in the world, the Queensland Government has put a big black mark against our state’s name with investors.
“This will affect investment in current and future resources projects because companies are more likely to invest in states and countries which have more reasonable and stable tax regimes.
“I can assure you, Queenslanders already worried about increases in the cost of living will not want to experience a downturn in the resources sector.
“Keeping the resources sector strong and productive is critical for our economy, especially when there are signs of tougher times ahead.
“Regional communities deserve much more funding for services and infrastructure – the resources sector backs the regions all the way on this – but it’s completely irresponsible to do this at the expense of a sector which is such a critical driver of jobs and business activity.
“The people who understand this best live and work in regional Queensland, because they know they will be the first affected when companies start to cancel or scale back resources projects.”
- The decision to abruptly add three new coal ‘super tax rates’ shows a deep misunderstanding of how a commodity-based export industry works. Resources companies rely on periods of higher prices to act as a buffer against when export prices fall. Resources investors look for royalty stability and consistency when deciding where to invest capital into resources assets. It’s not that long ago commodity prices were much lower, as recently as the six-month period to December 2020, when some coal companies were barely breaking even.
- The QRC completely rejects the Treasurer’s statement that the “sharemarket performance of Australian-listed coal companies shows that international investors also recognise that progressive coal royalties with bipartisan political support are good for business“. There has been a universally negative reaction to Queensland’s higher coal tax rates from resources companies, market analysts including Morningstar and Wood Mackenzie and from global investment banks such as The Bank of America, Royal Bank of Canada and JP Morgan. Banks are issuing warnings to investors, and the share prices of Queensland coal companies plummeted in response to the budget announcement on June 21.
- Click here to view resources company statements regarding Queensland’s new royalty taxes.
- Click here to view projected Qld coal royalties 2022-26 (Data source: Office of the Chief Economist)