Budget papers released this week said this reflected reductions in the expectation for commodity prices, including the average coking coal price being 28.3% lower over the period and oil prices being 30.1% lower over the period.

The reduction since the 2014-15 mid-year fiscal and economic review (MYFER) is $3.186 billion over the comparable period.

The papers said revenue from royalties and land rents in 2014-15 was expected to be $286 million lower than forecast in the review.

“This weakness is largely due to export coal prices being significantly lower than expected, partially offset by an improvement in the A$-US$ exchange rate.”

However, in dollar terms, the state’s royalty and land rent revenue is expected to grow by 10.1% in 2015-16 due to “moderate increases” in export coal volumes, and the Australian dollar depreciating slightly against the US dollar.

Cushioning this impact only slightly is the fact that the 2015-16 fiscal year also represents the first year with multiple proponents exporting LNG, although the low price of oil has offset some of this volume impact.

Royalty revenues peaked in 2008-09 as coal prices had been contracted at record levels prior to the onset of the global financial crisis. That was before royalty revenue plummeted in 2009-10, along with coal contract prices, and has not returned to 2008-09 levels.

The latest Budget estimated royalty revenue to be $619 million lower in 2014-15 than was estimated in that financial year’s Budget.

“Although coal export volumes have increased with mining companies pushing for productivity increases, weaker than anticipated coal and oil prices have more than offset this.

“After falling by 13.7% in 2014-15, royalties are expected to grow by 10.9% in 2015-16, supported by increased LNG export volumes as production ramps up, and a depreciating exchange rate.

“However coal prices are expected to remain around their current low levels for the first half of 2015-16, with hard coking coal prices for 2015-16 expected to be around $US36/tonne [or about 26%] lower than estimated in the 2014-15 review.”

The Budget added that although a “gradual recovery” in coal prices was expected from early 2016, coking coal prices were forecast to be “significantly lower” in 2017-18 than they were in the 2014-15 review.

“Across the forward estimates, a modest recovery in commodity prices, combined with growth in export volumes [especially from LNG] is expected to see royalty revenues pick up,” the Budget papers said.