Proposed new federal mining tax will kill investment and do nothing to reduce power prices

16 November 2022

The Queensland Resources Council (QRC) has called for cool heads and common sense to prevail over politics as Australia’s race to secure reliable, affordable power for industries and households heats up.

QRC Chief Executive Ian Macfarlane said today a proposed new mining tax on coal and gas producers would be a disastrous move by the Federal Government and lead to higher, not lower, power prices for consumers.

“Introducing a new mining tax on the resources sector, on top of the billions in taxes and charges coal and gas companies already pay to state and federal governments, will kill off investor interest in future resources projects in Australia, it’s as simple as that,” he said.

“The resources sector is already Australia’s highest company taxpayer by far, and on top of that companies pay substantial royalties, taxes and charges to state governments. Offshore oil and gas companies also pay a Petroleum Resource Rent Tax.

“Companies will simply walk away from investing in Australia if government taxes keep going up.

“History shows time and again that government manipulation of commercial markets does not work and has a detrimental effect on a country’s economy,” he said.

“A better solution to reducing power prices is to boost our gas supplies, which means Victoria and New South Wales need to take a leaf out of Queensland’s book and develop their own gas fields to meet the growing needs of their populations, instead of piping in Queensland gas from thousands of kilometres away.

“Queensland had the foresight to develop its coal seam gas fields 20-plus years ago, which involved local and international companies investing billions of dollars into expanding the gas industry, to the enormous benefit of Australians living and working on the east coast now.”

Mr Macfarlane said introducing a new energy tax would be the last straw for international investors and cripple any chance of Australia becoming the ‘energy superpower’ it has the potential to be.

“If this new tax goes ahead, investors will simply direct their capital into projects in other countries and regions,” he said.

“We’re already seeing companies like BHP and Peabody Energy saying they don’t see investment opportunities in Queensland right now because of the Palaszczuk Government’s decision to suddenly increase coal royalty tax rates to the highest levels in the world.

“This should be a red flag to any government because resources investment equals jobs, economic activity, taxes and royalties, yet here we go again with another new tax on resources being considered,” he said.

“Companies need stable government policy settings so they can make responsible, long-term decisions on behalf of investors.  Moving the goal posts once a project is already financed and off the ground is poor form and poor practice, and a clear disincentive to future investment.

“Our mutually beneficial trade relationships with Japan and Korea, developed over decades, will also be impacted by what appears to be an on-the-run approach to energy policy coming out of Canberra.

“Introducing new taxes is not an issue the resources sector will take lying down, and we will fight it every step of the way.”