The Queensland government’s decision to increase royalties on record-high coal prices is expected to net the state an additional $3bn this financial year – almost four times the windfall predicted in the June state budget.
The treasurer, Cameron Dick, will deliver Queensland’s mid-year budget update on Wednesday, which shows the state’s bottom line has swelled thanks to the controversial decision to introduce higher-rate tiers for coal royalties, which kick in when prices are high and miners are making superprofits.
The Queensland Resources Council opposes the royalty changes and has begun an advertising campaign – funded by a levy on coal, gas and metals producers – that is expected to run until the 2024 state election.
Last month, the Queensland Treasury said the higher royalties have had little impact on corporate profits from coalmining, and that global prices had increased the value of exports to a record $79.7bn for the 12 months prior to September.
The high global prices for coal – a result of the global energy shock – have also placed pressure on Australia’s domestic energy market.
The federal government has asked Queensland and New South Wales to cooperate with a plan that will temporarily cap the wholesale price of coal.
Queensland Treasury had initially predicted the new coal royalty system would increase government revenue by about $1.2bn over four years, including $765m in 2022-23.
But Treasury said prices had remained higher for longer than expected. Queensland producers also benefited from poor weather in NSW, and some European countries had been increasing coal generation to compensate for a reduction in Russian gas supplies.
Total coal royalties were expected to reach $10.7bn this financial year; including $2.95bn attributable to the increased royalty rates.
The changes were now expected to net $3.4bn in total over four years. Treasury was forecasting coal prices to return to relatively stable levels in the coming years, although it said “the speed of the decline remains a key source of uncertainty”.
Dick said the state was reinvesting additional coal royalty revenue in regional Queensland, in line with a promise that seeks buy-in for the royalties from traditional fossil fuel communities.
“This shows that coal royalties are worth fighting for, delivering a fair share for Queenslanders,” Dick said ahead of the budget update.
“These additional funds will be important to ensure Queenslanders are well prepared for the tougher times ahead.”
