Opinion: Queensland burning bridges with a broken tax promise

The state government has shattered trust given that less than two years ago, at the election, they promised not to impose new taxes on business. We could be paying for this year’s budget for years to come, writes Matt Canavan.

Almost every week I get calls asking whether I know anyone who wants to sell coal. Unfortunately there is not much I can do for these desperate buyers because coal markets are tight.

Demand for Australia’s high quality coal is in record demand as the world recovers from Covid-19 and Europe rushes to turn back on its coal fired power stations. Europe’s massive investment in renewables has failed to fill the gap left by a lack of Russian gas.

Two years ago Austria trumpeted the closure of its last coal-fired power station, becoming just the second European country to completely remove coal from its electricity supply. Now they are reopening this mothballed plant. Coal plants are also being reopened in Germany, Italy and the Netherlands.

The limiting factor for Europe will be access to coal. A few months ago when Vladimir Zelensky asked for Australia’s help to defend his nation, he asked us for coal. The Australian coal company, Whitehaven, promptly organised 70,000 tonnes to be sent. Zelensky did not ask us to send solar panels.

Many optimistic commentators predicted that western sanctions would quickly cripple Russia’s economy. That has proven to be wishful thinking. All that the sanctions have achieved is to push up the price of Russia’s major exports like oil, gas and coal. The Russian ruble this week reached seven-year highs against the US dollar.

The best way Australia could help to fight against Russia’s aggression is to produce more energy. The more energy the world produces the lower energy prices will be and hence the less money Putin will make to fund his war.

Senator Matt Canavan. Picture: NCA NewsWire / Gary Ramage

With that in mind, it is a curious decision this week for the Queensland government to impose more taxes on Queensland’s coal industry. This follows higher taxes that the Queensland government imposed on the gas industry in 2019.

In announcing the decision, the Queensland Treasurer claimed that the coal industry should be happy because their taxes had not increased for 10 years. Where is this rule that taxes should increase every decade?

Queensland was built in the Joh era on a proud record of low taxes and even cutting taxes like death duties. Under Labor’s “tax hikes every decade” approach there will be fewer jobs and less development in Queensland.

Attracting investors to build new mines and infrastructure is similar to asking someone to marry you. There has to be trust. If you are going to invest billions of dollars you want to know that the rules and conditions will not suddenly change after you have made the investment.

The Queensland government has shattered that trust given that less than two years ago, at the election, they promised not to impose new taxes on business. We could be paying for this year’s Queensland budget for many years to come.

The International Energy Agency this week concluded that given high coal prices, investment in Australian coal should be $8.5bn higher than it is planned to be. Labor’s new taxes just made the gap between the potential jobs Queensland could have, with what we will have, even wider.

What is even stranger is that, for a Labor government apparently committed to climate change, this new tax will only apply to high quality coals that can help reduce emissions. The proposed new royalties reach their highest level of tax when coal is over $400 a tonne. But the price of coal produced by lower energy coals, which produce more emissions, has only reached $290 a tonne even with these record high prices.

Ironically, under Labor’s new royalty regime, higher emissions coal will get lower taxes.

Given the higher demand for energy around the world, Queensland has a once in generation opportunity to attract new investment and help the world fuel itself. Our quality coals can help improve local environments and reduce carbon emissions. The Queensland government’s short-sighted decision has just made achieving these benefits harder.

Matt Canavan is a Queensland-based coalition senator.