The Queensland government’s decision to increase royalties on record-high coal prices will, inevitably, be spun as a radical move.
On face value, it is a brave decision. Plans to increase taxes on the mining sector have been – to put it mildly – historically fraught. The resources sector has already taken out full-page advertisements in the Courier-Mail, signalling it is up for a fight.
“They have been making record profits,” the premier, Annastacia Palaszczuk, told reporters before the state budget was unveiled on Tuesday.
“Look, I understand they might want to mount a campaign. But I believe that Queenslanders are on our side. Queenslanders will see that some of these companies are making billions of dollars on coal being exported overseas. And we can reinvest that money … into hospitals or schools and regional Queensland.”
When it comes to the execution, however, the royalty measures will achieve little other than angering the coal lobby.
The extra revenue raised – about $1.2bn predicted – is small in the context of a state whose budget bottom line is underpinned by coal royalties, and whose finances will be hardest hit by a disorderly energy sector transition.
Coal prices are at record highs – the best Queensland coking coal is selling for more than $500 a tonne. The state budget predicts those high prices will net the state an additional $12bn in total coal and gas royalties over four years, compared to the same set of predictions a year ago.
The changes to the royalties regime account for about a tenth of that amount. They’re hardly the sort of measures that will send miners to the wall, or undermine their investment decisions. Not even close.
The loudest calls for royalties reform in recent years have come from those who understand the scale of the inevitable transition away from fossil fuels.
They also know that, when coalmines become unprofitable, the resources companies will cut their losses. It will be left to governments and policymakers to ensure that workers and communities, including Queensland’s coalmining areas, are insulated from the impacts of the transition.
The end of Queensland’s 10-year royalties freeze provided a rare opportunity to ensure those coal companies help to fund the transition, having made significant profits from exporting resources that are owned by the state.
Politically, the Palaszczuk government has always found itself caught trying to manage a complex state; where voters in regional areas often have conflicting priorities with those in the cities.
The way Labor has managed that conflict has typically been to avoid it. It talks up a renewable energy transition, but conservation groups say it has been too slow to invest or consider the need for coal power closures.
The state’s latest action on royalties fits in the same middle-of-the-road policy basket. Just enough to send a signal to leftwing voters in the cities who might be flirting with the Greens. Not enough to justify a full-blown scare campaign from the miners.
For all Palaszczuk’s talk about Queenslanders taking a fair share, the state has also been at pains to make clear that the impact of the royalty measures is mild.
The treasurer, Cameron Dick, said the coal royalty measures would bring in $400m less – during a mining boom – than the last time royalties were changed by the Liberal National party in 2012.
“These changes mean coal producers can rest easy,” Dick said.
