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Why royalties row is not just about the money, it's also about love and respect

Opinion

It’s one thing for our government to be skimming billions off the top of Queensland miners’ massive profits, but surely they could say please and thank-you along the way, writes Robert MacDonald.

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The Queensland Government needs to realise the royalties fight with Queensland’s coal miners isn’t just about the money.

It’s also about love. Well, not love perhaps, but, at very least, respect.

I’ve written about, and sometimes worked with, mining companies for decades.

A common theme I’ve encountered is an enduring us-against-them mindset – them being everyone from firebrand environmentalists to cash-hungry governments.

Miners are always hugely proud of their technical achievements and their success at supplying so many of the essential ingredients of modern economies – from iron ore to energy.

But instead of receiving laurels and congratulations for delivering untold wealth to Australia, they often find themselves fighting off charges of being planet destroyers.

And governments, while offering the requisite words of praise, more often than not celebrate mining industry success by demanding a bigger slice of the pie.

Mining companies, if they’re smart, should know that when windfall profits appear – particularly for completely unearned reasons, such as a war in Ukraine and global power supply disruptions – the government will come sniffing around for its share.

The Queensland Government’s recent increase in coal royalty rates, at a time of record coal prices, and at the scheduled end of a 10-year royalty freeze, shouldn’t have come as any surprise.

But the miners do have every right to be surprised by the Government’s point-blank refusal to discuss its thinking before announcing the new arrangements.

Having the Government say please and thank you before hiking the royalty rate probably wouldn’t have stopped the miners from being aggrieved.

But it might have taken some of the heat out of the issue.

And it might have helped resolve what would seem a fairly simple question: how much money is actually at stake?

Treasurer Cameron Dick insists the new royalty regime will raise an additional $1.2 billion over the next four years – a big number in absolute terms but barely a drop in the ocean for the miners according to Queensland Treasury.

“The addition of the new (royalty) tiers is not expected to have any material impacts on the coal industry or viability of producers, given the increases are applied only at relatively high prices,” the latest State Budget papers say.

That’s dead wrong, said the Queensland Resources Council.

It claims the new royalty regime is expected to generate $7.6 billion over the next four years, most of it in the current financial year.

QRC chief executive Ian Macfarlane insists the royalties hike will do more harm to the industry than the Ukrainian war and China’s coal import ban.

I did ask Dick’s office if they could explain the enormous gap in estimates. They put it down to different assumptions about how long coal prices might stay high.

Whatever the case, at least one side of the debate, and probably both, are exaggerating extravagantly.

We’ll find out who’s closer to the truth when royalty figures are published in next year’s State Budget.

But in the meantime, the State Government’s refusal to deal sensibly with the mining industry is just plain stupid.

Why deliberately pick a fight with the biggest contributor to the State’s economy?

But equally, the mining industry’s dummy spit is a bit over the top. It’s not as if the miners were already sharing their recent windfall profits by, say, doubling salaries or dramatically increasing their support for local communities.

The miners are rightly outraged as being blindsided by this latest royalties hike. But threatening investment strikes, as BHP, Bravus and others have done, is surely counter-productive.

It’s surely not in the best interests of the mining industry to let the world – and potential investors – know it can’t get along with the State Government.

And it surely can’t imagine it can get the Government to back down by threatening to withhold new investment.

With so many billions of dollars already invested in Queensland, and so many communities and jobs reliant on mining, it has to make more sense for both parties to sit down and talk.

But that first requires the State Government to finally show the miners some respects, and who knows? Possibly even some love.

Until then it’s perhaps understandable that the miners are acting more like scorned lovers with badly hurt feelings than rational, hard-headed businesses.

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