A new report has found that the Queensland Government’s decision to impose the world’s highest royalty taxes on coal producers will lead to higher unemployment in the mining sector.
According to data from the Queensland Resources Council’s (QRC) latest State of the Sector report for the June 2022 quarter, more than one quarter (27 per cent) of resources leaders expect to employ less people at existing operations over the next five years as a direct result of the royalty hike.
This compares to the same survey six months ago, which found no Queensland CEOs expected to cut jobs over the next 12 months and 35 per cent were feeling confident about increasing employment at their operations.
QRC chief executive Ian Macfarlane said the report confirms the industry’s worst fears about the impact of the government’s higher royalty taxes on future investment plans.
“This latest data shows the State Government’s extra royalty tiers have dramatically impacted business confidence and investment plans across all commodities, not just coal projects,” he said.
“The report is a major red flag because it shows how much the royalty hike has hurt Queensland coal projects as well as gas, base metals and critical minerals projects.
“Most resources companies don’t just focus on just one commodity, so hitting the coal sector with higher taxes has had a scattergun effect across our industry and forced a rethink of investment plans.
“Nearly one third (31 per cent) of non-coal CEOs now expect to cut jobs at their existing operations over the next five years, as companies look to invest capital in less-risky destinations.
“This is a very sobering outlook for Queensland at a time people are already feeling under pressure from rising costs of living and higher interest rates.
“The last thing people need to deal with is a downturn in the resources sector, which will impact every Queenslander in one way or another.”
Macfarlane said resources companies with established operations in Queensland can’t pick up mines and relocate them, but new projects or planned expansions of existing sites will be hit hard as companies consider investing in less highly taxed destinations.
The QRC’s latest report found more than half (54 per cent) of CEOs believe the likelihood of expanding or upgrading their existing operations has decreased because of the royalty hike.
More than half (62 per cent) said the likelihood of new projects had also fallen, with 38 per cent saying the chance of undertaking new projects had dropped by more than 25 per cent.
“This is a big hit to industry investment plans for a State Government that’s constantly talking up an expanded new economy minerals sector, and to Australia’s future energy and resources security,” Macfarlane said.
He said the impact of Queensland’s now uncertain resources investment environment is already being felt, with Australia’s largest mining company BHP announcing it would pause investment plans in Queensland due to the sudden increase in taxes.
“And this is unlikely to be the last project to be affected. It’s a very difficult situation for our sector, when only four months ago we were being thanked by the State Government for playing a key role in Queensland’s economic recovery from COVID,” he said.