Published Monday, 02 June, 2008 at 12:01 AM
Treasurer
The Honourable Andrew Fraser
Resources Boom to Benefit All Queenslanders
Treasurer Andrew Fraser has announced the State Budget to be handed down tomorrow will include a new two tier coal royalty rate as part of a critical review of the state’s 30 year old royalty regime.
Most mineral prices have doubled or trebled over the last five years – and so have the profits made by mining companies.
Lead has increased by 469% while copper has increased by 288% since 2000.
Most recently, forward contract prices have indicated that coal – one of our state’s most valuable and abundant resources – has increased significantly in value.
“The new two-tier coal royalty will only apply to coal being sold at above $100 per tonne. The same 7 per cent rate will still apply to any coal sold under $100 per tonne,” Mr Fraser said.
“Royalties are charged because the minerals belong to the people of Queensland.
“It’s about getting a fair return for the people of Queensland on their minerals.
“The royalty regime, last overhauled in 1974, said royalties should be set at 10 per cent of the value of minerals mined and exported.
“To promote coal industry development a discount rate of 5 per cent was set, which then became 7 per cent in 1994.
“However in 1994 we also removed a rail surcharge as part of competition policy reforms, which benefited mining companies.
“Our royalty regime does not need to set discounts to promote industry development.
“Times have changed, this is not an industry that needs discount rates to stimulate investment.
“Our task is about financing the infrastructure investment to support the resources boom, not discounting their royalty payments.
“This is about a fair deal for the owners of the minerals – the people of Queensland.
“There is no doubt that we are going to benefit from elevated prices, but under current arrangements Queenslanders will receive 7 per cent of the value of that coal and the companies will get the rest after they pay tax to the Commonwealth.
“Now Queenslanders will receive 7 per cent of the value up to $100 per tonne and 10 per cent of the value thereafter.
“That means should the prices fall back below $100 per tonne, the same royalty rate as is currently in place will apply.”
The new two tier coal royalty rate will generate $578 million in 2008-09. It is expected that this figure will drop to $183 million in 2011-12.
Facing up to the challenge of climate change and developing clean coal technology is another key challenge for the government and industry.
“That’s why, quite separately, we put in place the Australian Coal Association Low Emissions Technology levy, legislated under the Clean Coal Technology Special Agreement Act.
“The Budget will also feature a decision to make the levy contributions deductible from royalty payments – the Queensland Resources Council has lobbied for this change and we agree.
“Moreover, we will backdate that deductibility to the start of the agreement in July last year.
“That decision supports our commitment to work with the industry to fund new technology to secure the planet and the future of the coal industry.”
The Treasurer also committed the government to increased infrastructure spending to support the coal industry in tomorrow’s Budget.
“We are committed to the long term $5.4 billion Coal Transport Infrastructure Program and tomorrow’s Budget will put the money on the table to demonstrate our determination to build export capacity – for the benefit of all Queenslanders.”
Media Contact Chris Taylor 0419 710 874
Most mineral prices have doubled or trebled over the last five years – and so have the profits made by mining companies.
Lead has increased by 469% while copper has increased by 288% since 2000.
Most recently, forward contract prices have indicated that coal – one of our state’s most valuable and abundant resources – has increased significantly in value.
“The new two-tier coal royalty will only apply to coal being sold at above $100 per tonne. The same 7 per cent rate will still apply to any coal sold under $100 per tonne,” Mr Fraser said.
“Royalties are charged because the minerals belong to the people of Queensland.
“It’s about getting a fair return for the people of Queensland on their minerals.
“The royalty regime, last overhauled in 1974, said royalties should be set at 10 per cent of the value of minerals mined and exported.
“To promote coal industry development a discount rate of 5 per cent was set, which then became 7 per cent in 1994.
“However in 1994 we also removed a rail surcharge as part of competition policy reforms, which benefited mining companies.
“Our royalty regime does not need to set discounts to promote industry development.
“Times have changed, this is not an industry that needs discount rates to stimulate investment.
“Our task is about financing the infrastructure investment to support the resources boom, not discounting their royalty payments.
“This is about a fair deal for the owners of the minerals – the people of Queensland.
“There is no doubt that we are going to benefit from elevated prices, but under current arrangements Queenslanders will receive 7 per cent of the value of that coal and the companies will get the rest after they pay tax to the Commonwealth.
“Now Queenslanders will receive 7 per cent of the value up to $100 per tonne and 10 per cent of the value thereafter.
“That means should the prices fall back below $100 per tonne, the same royalty rate as is currently in place will apply.”
The new two tier coal royalty rate will generate $578 million in 2008-09. It is expected that this figure will drop to $183 million in 2011-12.
Facing up to the challenge of climate change and developing clean coal technology is another key challenge for the government and industry.
“That’s why, quite separately, we put in place the Australian Coal Association Low Emissions Technology levy, legislated under the Clean Coal Technology Special Agreement Act.
“The Budget will also feature a decision to make the levy contributions deductible from royalty payments – the Queensland Resources Council has lobbied for this change and we agree.
“Moreover, we will backdate that deductibility to the start of the agreement in July last year.
“That decision supports our commitment to work with the industry to fund new technology to secure the planet and the future of the coal industry.”
The Treasurer also committed the government to increased infrastructure spending to support the coal industry in tomorrow’s Budget.
“We are committed to the long term $5.4 billion Coal Transport Infrastructure Program and tomorrow’s Budget will put the money on the table to demonstrate our determination to build export capacity – for the benefit of all Queenslanders.”
Media Contact Chris Taylor 0419 710 874