Editorial: Japan’s anger over coal royalty increase is completely justified
The Palaszczuk government’s coal royalty increase “sent shockwaves” through the economic heart of Queensland’s largest trading partner and one of the world’s biggest economies, and when such an ally starts delivering blunt criticism of the state’s tax policy, it is time to take note, writes the editor.
Opinion
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When Queensland’s largest trading partner starts delivering blunt criticism of the state’s tax policy, it is time to take note.
Japan’s ambassador to Australia, Shingo Yamagami was not shy on Tuesday when he said the Palaszczuk government’s coal royalty increase “sent shockwaves through Tokyo” and affected trust between Japanese businesses and the state.
For a diplomat to publicly rebuke the state government shows the depth of the anger, for it to happen a second time within two months shows that it is not going away.
Speaking at a Minerals Week event in Canberra, Mr Yamagami said the royalties hike – or more specifically the lack of consultation – had hurt our close trading partner.
“Japanese companies don’t see Australia as a house, but as a home. This is why decisions like the Queensland government’s coal royalty hike carry so much potential risk,” he said.
Worryingly, he said: “This can have implications beyond Queensland, beyond the coal industry.”
This is not just another mining giant angered over profits, but a nation with whom Queensland exported more than $20bn in goods over the 2021-22 financial year.
Of course, it is not necessarily wrong for Treasurer Cameron Dick to ask companies making significant profits from the state’s resources to pay more tax where reasonable.
Coal profits have been at record levels and if the companies are enjoying the benefits from this, so too should Queenslanders from royalties being invested back into the regions, as well as being used to fund hospitals, schools and so forth.
But this should not be done to the point where it scares off future investment – and that is where the situation increasingly looks to be heading.
The damage caused appears to be as much about the way the Queensland government has handled the situation as it is about the royalty increase itself.
Mr Yamagami, in his speech, highlighted the importance of the trust built up between Queensland and Japan over decades before underscoring the impact the lack of consultation had.
Treasurer Cameron Dick and Premier Annastacia Palaszczuk have been seemingly belligerent in their dealings with the mining industry and the way the way this issue is being handled is flowing on to international relations.
Japan played an important role in the diversification of Queensland and Australia’s exports in the wake of China’s trade sanctions and economic coercion.
While Australia’s and the state’s interests should be put first, it is in neither’s interest to fracture the relationship with Queensland’s largest trading partner.
There is no sign that the Palaszczuk government is considering backing down on its tax hike. The Premier met with the ambassador while in Canberra last month, and Mr Dick met with Japanese businesses following those talks. Those meetings obviously did little to repair the damaged relationship.
As Mr Yamagami said in Canberra, it is a start – but this is not a relationship that can be allowed to wither.
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