Aurizon coal dispute overshadows Annastacia Palaszczuk Japan trade trip

Annastacia Palaszczuk’s trade mission to Japan overshadowed by a heated mining industry brawl that threatens coal exports.

Annastacia Palaszczuk’s trade mission to Japan may be overshadowed by the coal dispute. Picture: Zak Simmonds.

Annastacia Palaszczuk’s trade mission to Japan risks being overshadowed by a coal mining industry brawl that has threatened coal exports and could blow a $2 billion hole in next month’s Queensland budget.

The dispute centres on an economy drive by Aurizon, owner of Queensland’s coal rail network, after the state competition tsar issued a draft decision tightening the monopoly operator’s belt by $250 million a year.

The cost-cutting will reduce Queensland’s annual coal exports by at least 20 million tonnes, according to Aurizon, and jeopardise around $500m in coal royalties each year.

The royalties issue looms large over the Palaszczuk government’s June 12 budget, with Treasurer Jackie Trad having previously projected a surplus of only $165m this year. Her budget challenge was yesterday made easier by BHP Billiton settled a $329 million royalties stoush with the state - after Ms Trad threatened to reveal secret details of the company’s Singapore-based trading business in a Supreme Court trial.

Coalminers who rely on Aurizon have criticised the company’s cost-cutting as a “thuggish” attempt to use the regulator’s draft decision as cover to make them shoulder a greater burden.

Aurizon accused the Queensland Resources Council of “grandstanding” when they know full well that, if finalised, the regulator’s decision will apply retrospectively and “potentially cost the company hundreds of millions of dollars”.

The company’s move has also alarmed Japanese diplomats and steelmakers who will lobby the Queensland Premier to ensure the dispute is resolved quickly when she arrives in Tokyo today.

Opposition leader Deb Frecklington urged regulatory reform to restore confidence to the resources sector. In the meantime, she said, the government should “immediately intervene” and encourage the Queensland Competition Authority to finalise the process.

“Our trading partners are losing confidence in Queensland’s regulatory system,” Ms Frecklington told The Australian.

However the Palaszczuk government is reluctant to intervene in the Aurizon case while the competition authority considers submissions on its draft decision, and while Aurizon has an outstanding legal bid to scrap the draft decision and restart the process.

Aurizon claims the competition tsar, Roy Green, mishandled a conflict of interest. At the same time that Dr Green oversaw regulation of Queensland’s coal sector, he was being considered to head NSW’s Port of Newcastle — the linchpin of the rival Hunter Valley coalmining region.

Professor Green, who now chairs both the QCA and Port of Newcastle, denied any direct conflict of interest, citing advice from Queensland Integrity Commissioner Nikola Stepanov.