One-off $2.5b resource royalties windfall invested following coal hike

Queensland’s Treasurer will today reveal investment plans for a $2.5 billion resources royalty windfall as the state cashes in on booming global prices for coal.

A ONE-OFF $2.5b resources royalties windfall will be invested as a long-term asset in the state’s coffers following an unprecedented increase in the global spot price of metallurgical coal.

Treasurer Cameron Dick said resources royalties were now expected to increase by $2.9b this financial year – with the revised overall royalties figure now at more than $6.2b.

Mr Dick, who will reveal the windfall during Thursday’s Mid Year Fiscal and Economic Review, said the temporary higher prices needed to be seized upon.

“Queensland’s traditional industries have been one of our great strengths throughout the pandemic, so it’s important all Queenslanders share in the benefits those industries bring,” he said.

“These higher prices are only temporary, so we need to lock in their benefit for all Queenslanders. When Queensland benefits from higher royalties, we end up losing that money through the GST distribution process in later years.

“That’s why it makes sense to invest this money now.”

An increase in the price of metallurgical coal has landed the Queensland economy a $2.5b resources royalty windfall.

The royalties spike has been largely due to an unprecedented rise in the global spot price of premium hard coking coal which hit a new peak of more than US$400 per tonne in September this year.

The government anticipates the higher price will only be temporary because of short-term supply factors and disruptions.

The $2.5b will be invested as a long-term asset in the state’s consolidated fund where it will be available to invest in capital and be managed the same as the defined benefit fund.

The remaining $400m is expected to be pumped into general revenue.

The Treasurer on Tuesday wouldn’t speak about whether Queensland was still on track to record a $153m surplus over the forward estimates, instead saying figures would be revealed during the MYFER update.

During this year’s June budget it was revealed Queensland's 2021-22 deficit was now $3.8b – down from the $8.6b predicted last December.

It was anticipated that total debt would be lower than the $130b projected for 2023-24 – and instead hit $127 billion during 2024-25.

Originally published as One-off $2.5b resource royalties windfall invested following coal hike