Controversial coal revenue boost to fund Queensland cost-of-living measures

The controversial new coal royalty rates which Queensland Treasurer Cameron Dick denied broke an election promise of no new or higher taxes has put billions on to the budget bottom line.

Queensland Premier Annastacia Palaszczuk and Treasurer Cameron Dick. Picture: NCA NewsWire/Tertius Pickard

Queensland’s Palaszczuk government will deliver a record surplus in next month’s budget, driven by the coal royalty regime that has fuelled a $6bn jump in state revenues since December.

The introduction last year of three new tiers of royalty rates on soaring worldwide coal prices has produced a turnaround in fortunes for the government, which had predicted a $1bn operating deficit for this financial year.

Government sources told The Australian that the $6bn boost in revenues since December comes on top of an already announced $7.3bn in extra income that had flowed into state coffers in the second half of last year.

The revenue boost is made up almost entirely of coal royalty payments but has been supplemented by increases in royalties from higher gas prices and stamp duty on property sales.

A month after Jim Chalmers delivered the first federal budget surplus in 15 years off the back of surging iron ore and coal prices, Queensland Treasurer Cameron Dick will deliver a record state budget surplus that could be around $10bn.

Queensland Treasurer Cameron Dick will deliver a record state budget surplus that could be around $10bn. Picture: Dan Peled/NCA NewsWire

The sources said most of the windfall would be used to pay down state debt although both Mr Dick and Premier Annastacia Palaszczuk on Sunday indicated that some new “cost-of-living” measures would be offered in the June 13 budget.

“You can expect more cost-of-living measures in the budget; we are absolutely focused on that, as well as health and housing – these are the issues families are talking to us about,’’ Ms Palaszczuk said while announcing $150 vouchers for 30,000 kids under four to take swimming lessons.

Queensland Premier Annastacia Palaszczuk. Picture: NCA NewsWire/Tertius Pickard

The royalty regime, which includes the highest taxing rates in the world – with a top tier of 40 per cent for coal prices above $300-a-tonne – has drawn criticism from the resource industry, which has claimed it is threatening future investment and may lead to the closure of mines.

When the new royalty regime was announced in last year’s budget, Mr Dick said it would raise an additional $1.2bn over the next four years but with coal prices reaching record highs last year, the Queensland Resources Council estimates that $13.6bn will be paid in coal royalties – about $8bn more than originally forecast – in the 2022-23 financial year alone.

QRC chief executive Ian Macfarlane said the royalty regime had damaged Queensland’s reputation as a place to invest and resource companies were already shelving projects. “We’ve always said imposing the world’s highest coal royalty tax would hurt ­regional Queenslanders, not help them.

“Regional Queenslanders will pay the highest price for the damaging effects of the coal royalty increase both now and with the loss of investment in the future.

“We’ve already seen more than 2000 jobs cancelled as a result of the new royalties regime, and more than $100bn in new investment in the pipeline is under a cloud, including in minerals projects needed for green energy.”

The QRC has so far unsuccessfully lobbied for the government to negotiate a new regime.

Mr Dick said the government intended to retain the royalty regime and the LNP, which last year voted to support the new rates, should declare whether they would scrap them if elected at next year’s state election.

In a statement, he said the government had returned a surplus last year, which Treasury documents showed had been partly delivered on the back of the high coal prices and royalties under the previous regime

“The Queensland coal industry is awash with cash, and the people of Queensland will be expecting nothing less than their fair share,’’ he said. “However, it should be noted that Queensland returned to surplus well before the recent federal budget, and that early return to surplus has helped to cut Queensland’s debt burden by 54 per cent.