The government announced its proposal to revise the scheme in the 2001-02 State Budget and a draft policy was released for consultation to the mining industry and its representatives in July. Industry representative the Queensland Mining Council (QMC) has been vociferous in its condemnation of what it describes as an opportunistic revenue grab.
Currently the government allows concessions on a number of costs which coal companies deduct from the sale price of coal before the royalty of 7% is calculated. As of January 1, these costs, except for port-related costs and demurrage, can no longer be deducted. Allowing port related costs and demurrage costs to continue being deducted amounts to some $20 million worth of concessions, which the government says it agreed to after industry consultation.
Nevertheless the impact of the new system will still cost the industry an expected $60 million more a year, or about 50 cents more a tonne of coal. The QMC warns that the new scheme could cost jobs and would probably be funded by company shareholders and workers' bonuses.
Making the announcement, mines minister Stephen Robertson said the changes would “better reflect the true value of Queensland's high quality coal resources”
He said under the current arrangement the royalty is not based on the true value of the coal “and so the returns to Queensland mums and dads are subsequently lower than what they should be”
Just the day before the new scheme was announced, QMC president Ken Foots told an industry gathering that it would severely impact of the ability of the coal industry to remain competitive.
Foots said the move signalled “a return to the bad old days when the industry was taxed according to its perceived capacity to pay”
Queensland mine owners currently pay royalties that are on average almost double those of NSW royalties, he said.
The value of Queensland coal exports was up 36% to $7.6 billion in the 12 months to September 30.
Coal company CEOs met on Friday, December 14 to formulate a response to the government’s announcement.
