Higher coal and petroleum royalties due to booming global prices have helped improve Queensland's budget bottom line, with the state government now expecting a $5.18 billion surplus by June.
The state was initially forecast to finish the 2022-23 financial year $1.029 billion in the red, but the mid-year budget update has instead predicted a $6.2 billion boost.
But Treasurer Cameron Dick has warned factors including the ongoing conflict in Ukraine, global inflation and geopolitical instability meant that $5.18 billion surplus "may well be the high-water mark" in the current economic cycle.
The increase in coal royalties is partly driven by a new royalty regime, which is predicted to pump an extra $2 billion into the state's coffers this financial year.
Coal mining companies were hit with three new progressive tiers in July for prices above $175 a tonne, following a decade-long freeze on coal royalty rates.
Those higher royalty rates are now expected to deliver $2.95 billion this financial year – compared with $765 million forecast in the June budget.
Mr Dick said "sustained higher coal prices" — including "unprecedented" thermal coal prices — have driven royalty revenues much higher than previously forecast.
Premium thermal coal prices reached $US438 by September this year.
Overall, Treasury is forecasting total coal royalties will now reach $10.698 billion for 2022-23 and $21.549 billion over the four years through to 2025-26.
As coal prices return to "more normal levels" in the following financial years, the revenue from the new tiers is also predicted to decline – with Treasury projecting $170 million for 2023-24, $141 million for 2024-25, and $148 million for 2025-26.
The state's coal royalty hikes have been the subject of vocal opposition from the mining industry, with the Queensland Resources Council last month launching an advertising blitz targeting the changes.
'Killing the golden goose'
In a speech, Mr Dick said: "Coal royalties are worth fighting for" and that government would "put those royalty gains to work, especially in regional Queensland".
"We will set aside $3 billion in a long-term asset, held in a consolidated fund, dedicated to future infrastructure projects in regional Queensland," he said.
"These new royalties that were earned in regional Queensland will not leave regional Queensland."
Queensland Resources Council chief executive Ian Macfarlane said the royalty regime had "taken away the incentive to invest" in the state and accused the government of "killing the golden goose".
Asked about the federal government's request for a price cap on coal, Mr Dick said the state government needed to see the detail of the final proposal before they can form a view about compensation or other support for Queensland.
"The premier is right in defending Queensland's position," he said.
"But we are engaging positively and constructively with the federal government, we'll continue to do that, and there's a lot of discussions happening … to get what hopefully will be a mutually beneficial outcome for Queensland and other states."
Net debt forecast to hit $36b in three years
Net government debt is forecast to be $14.534 billion by 30 June 2023 – more than $5.2 billion lower than projected in June.
It is expected to reach $36.778 billion by 2025-26.
While payroll tax and motor vehicle duty are expected to be stronger than expected in 2022-23, transfer duty is expected to be "slightly weaker" than previously forecast.
General government expenses in this financial year are forecast to be $76.047 billion – more than $1 billion higher than the June budget estimate.
"This increase is mainly due to additional health expenditure, a one-off water bill discount for households in south-east Queensland, actuarial adjustments to defined benefit superannuation liabilities [etc]," the mid-year budget update documents state.
Shadow treasurer David Janetzki hit out at the government, saying there have been "revenue rivers of gold" and "the question that has to be asked: is what does Queensland have to show for it?"
