Article – QRC warns QLD over potential mining royalty hike8 May 2014
30 April 2014
The Queensland Resources Council has warned the QLD government to not fall populist sentiment that more mining taxes are the solution to budget woes.
His comments come on the back of the public reported preference of a hike in current royalties to fix that state’s $80 billion budget woes and QLD’s new Strong Choice campaign.
The $6 million campaign, launched earlier this month, has been dubbed “The Peoples’ Budget”, and is designed to give people both a greater insight into the budget process and allowing people a greater say in its outcomes.
It states that peoples’ “responses here will be a fundamental part of an unprecedented consultation process that is already going on across Queensland”.
According to the State Government, increasing royalty rates on all mining and gas projects will provide $8.812 billion in funding, although it does go on to provide an option to increase all royalties except for coal – adding $1.845 billion to the budget and keeping to its promise from last year not to changing the rates of coal for a decade.
QRC head Michael Roche described the sentiment as “instinctive but misinformed reaction given the tough economic conditions and outlook confronting the sector”.
“The coal sector for example has shed over 8,000 jobs in Queensland in the face of some of the most challenging business conditions in decades,” Roche said.
“There can be no dispute that the best means of boosting the resources sector contribution to the state’s fiscal repair task is the pursuit of policies to promote sector growth, not a resort to job-destroying tax increases.”
He went on to outline the statements accompanying the Strong Choices Survey which state “Increasing mining royalty rates at a time of lower commodity prices may impact on the national and international competitiveness for Queensland mines and will impact on jobs”.
“Increasing royalties may make resources companies less competitive on the world market. Ultimately, these companies may choose to close some projects, and abandon the development of others, affecting jobs and other investment in Queensland.”
Roche added that the state already sits amongst the regions with the top taxation rates globally.
Last year Queensland premier Campbell Newman ruled out a new coal royalty.
Newman faced backlash from miners and the Federal government in 2012 when he moved to increase coal royalties. The Queensland Resources Council said the state government’s royalty increase “could be the final straw” for the sector.
Newman ruled out further royalty hikes at the opening of BHP’s Daunia coal mine.
“We didn’t like to do it, there won’t be any further changes and we are certainly trying to give people some [cost] offsets elsewhere,” he said.
“We are doing everything we can to put on the table regulatory reform that will mean mines can find operating cost savings.”
Roche called on the premier to stick to his statements.
“The QRC has every confidence that the Newman Government has no intention of walking away from these unequivocal commitments to fiscal stability for the coal sector,” Roche stated.
He went on to say “there is no quick fix in escalating royalties for other resources sector industries”.
“The companies behind the emerging export gas sector have invested more than $60 billion in an uncertain global market.
“A royalty increase now would undermine this huge commitment to Queensland and future investment potential.”
However, the QRC has supported the potential seal or leasing of state assets such as ports, in order to reduce the $80 billion in state debt.
“The key caveat to the QRC’s support for such a program is that it must be accompanied by a suite of appropriate commercial and regulatory protections for the users of these assets to ensure that Queensland’s core infrastructure supports the state’s competitiveness in a global market for resources,” Roche said.
“In relation to ports, the sector is eager to be involved in discussions around both future ownership and operation of the ports.”
Courtesy of Australian Mining