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Huge rebound in coal and gas royalties but renewables smash GOCs

Business

The coal and LNG industries are expected to rebound sharply over the next year with the total resources sector expected to deliver more than $3 billion to Treasury in royalties.

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But the traditional cash cow of government-owned generator companies is fast disappearing. Treasury has forecast a $300 million decline to zero in the dividends from the electricity generators over the forward estimates as the influx of renewables continues to drive down the wholesale electricity price.

Tax equivalents from the generators show a similar decline to $13 million in 2024-25.

Treasury’s forecasts point to a much stronger coal sector which would deliver $2 billion in 2021-22, a 17 per cent increase on the previous year but still well down on the $3.5 billion delivered in 2019-20.

Surprisingly, the Government believes there will be a return of demand for coal from China, which has banned all imports of Australian coal. That has led to a shake-up in the market which meant Australian producers have received less than many of their overseas competitors.

But producers have managed to redirect much of the tonnage to India.

The Government has forecast an increase in tonnages as well as prices but said they would remain below 2019-20 levels until 2023-24.

It’s petroleum royalties, which includes gas, that provides the best increase. Treasury has forecast a 112 per cent increase to $632 million as prices surge on the back of an increase in oil prices.

The Government said production cuts by global oil producers had meant prices rose above $US70 a barrel “which should see the price and value of Queensland’s LNG exports rebound throughout 2021”.

However, that was not expected to last and global oil producers were expected to crank up their ouput.

“As a result, petroleum royalties are expected to decline by 12.8 per cent in 2022-23.”

Payroll tax is expected to grow by 7 per cent in 2021–22, reflecting a strong recovery in employment and wage conditions, and expected increased revenue resulting from additional Office of State Revenue compliance activities. Annual average growth of 5.5 per cent is expected in payroll tax revenues from 2022–23 onwards, broadly in line with expected employment and wage growth over the forward years.

The Government has created $3.34 billion Queensland Jobs Fund – including a new $2 billion Queensland Renewable Energy and Hydrogen Jobs Fund – to stimulate job creation and industry development, which business has welcomed.

The jobs fund will be complemented by a $460 million investment in skills and training to address labour shortages and continue driving down Queensland unemployment

RACQ’s head of public policy Susan Furze said investment in infrastructure and transport projects outlined in the Budget would help keep the Queensland economy firing as it emerged from the COVID-19 pandemic.

She said $27.5 billion in transport funding would go a long way to helping Queenslanders move safely and efficiently around the State

The Chamber of Commerce and Industry Queensland welcomed the new jobs fund which it said would allow businesses to scale up.

But it said there were also missed opportunities, particularly in the skills development area where the Government appeared to be replicating last year’s announcement with some tinkering.

“It’s definitely a budget focused on jobs,” CCIQ’s Amanda Rohan said.

 

 

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