Coal Royalties

Coal Royalties

(Private Member's Statement, 30 November 2023, Legislative Assembly, NSW Parliament)

The Sydney electorate is deeply concerned that the unprecedented challenges associated with climate change and the rising cost of living require government investment to ensure that New South Wales can transition to a clean and green future and prevent environmental erosion, disaster and poverty. Coal is a dirty fossil fuel that is contributing to these challenges. Extracting and burning coal produces huge greenhouse gas emissions, which impact on weather events, food and water security and housing displacement. As a source of energy, coal is becoming unaffordable and coalmining communities are at risk of economic shock as the world transitions away from coal. Profits from coal should be invested in solutions to these challenges. The war in Ukraine has created an unexpected short‑term boom in the price of thermal coal, providing a rare opportunity to access new funds from it. I welcome the 2.6 per cent increase in the mining royalties rate, which has not risen since 2008. But new rates will not apply until next year and the flat rate will stay the same regardless of how high coal prices go.

Last year the Queensland Government introduced a new, improved royalty scheme to ensure that the people of Queensland would gain from increased coal prices. Queensland already had three brackets of royalty rates that increased as coal prices rose. It has now increased the number of brackets to six, reaching 40 per cent when the price rises to $300 a tonne or more. Higher rates, though, only apply to the part of the price above the threshold, making the rates at the higher end only 12.3 per cent higher than what was paid under the previous policy. The maximum rate for New South Wales coal royalties will only rise to a maximum of 10.8 per cent for open‑cut mines.

Using data on the export prices and volumes sold, published by the Department of Industry, Science and Resources, the Australia Institute calculated the additional revenue New South Wales would have earned in the 2021‑22 financial year if the Queensland rates applied here. In that period, New South Wales exported 144 million tonnes of thermal coal and 26 million tonnes of coking coal at prices ranging from $118 per tonne to $378 per tonne, which means we could have reaped $2.8 billion in additional revenue each year. The institute's estimates for this financial year, based on published prices for the first quarter of the year and high and low forecasts for the three remaining quarters, suggest that we could increase royalty income by between $4.2 billion and $6.2 billion this year. Under new rates introduced, the State's budget is only forecast to benefit from an additional $2.7 billion over four years. Every cent of additional profit from the rise in coal prices will line the pockets of multinational mining companies that are operating in this State, with no benefit to the community.

The coal in the State's earth belongs to the people—not the mining companies that exploit it—and we should get something back, particularly at a time when we urgently need to invest in generational infrastructure. We need to transition every aspect of society—including energy, transport, housing, construction and agriculture—to prevent global warming. We need to establish new green industries in coalmining communities to help them survive the transition, including through the Royalties for Rejuvenation Fund, which is only funded for $25 million a year for four different regions. We need to disaster‑proof communities from fire, flood, drought and heatwaves and ensure that housing can adapt to the new environment.

Importantly, we need to build 5,000 new social housing homes every year for the next 10 years just to house those on the waiting list. Ensuring that coal companies can make mega profits out of the war in Ukraine is not a priority. It is time that the people of the State get a share in the benefits of soaring commodity prices. The mining boom of the 2000s was a missed opportunity. While it may have helped us stave off the impacts of the global financial crisis, ultimately the mining companies reaped the benefits through massive profits with little generational infrastructure to show for it. We do not want the legacy of this new boom—which will not last forever—to be nothing more than holes in the ground as miners clear out. I call on the Government to follow Queensland's lead and introduce a price‑based coal royalties system that ensures that the people of New South Wales benefit from increased coal prices.

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