THE QUEENSLAND Government’s 25 percent gas royalty hike will translate into a slug of more than $13 million a year on Queensland industry and households through higher energy costs, the Queensland Resources Council (QRC) said today.

 QRC chief executive Ian Macfarlane said it was likely the cost of the tax hike would be passed on directly to consumers.

“When you put up taxes someone has to pay, and in this case unfortunately that means that domestic gas users will have to reach further into their pockets,” Mr Macfarlane said.

“Domestic industry and manufacturers have been struggling under the weight of higher gas bills, which can run into the millions of dollars already.

"An extra tax hit of more than $13 million a year will make Queensland manufacturers less competitive and it will have a bigger flow-on effect for other Australian businesses that rely on Queensland gas.

“Up until now the Palaszczuk Government has been taking sensible measures to supply domestic industry with affordable and reliable gas, including through domestic gas only acreage releases.

“A 25 percent gas royalty tax increase could prove to be self-inflicted economic damage.

“QRC has urged the Queensland Government to exclude domestic gas from the royalty tax increase and to delay the introduction of any gas royalty increase until January 1 2020 to address confusion about the legislation," Mr Macfarlane said.

“Under the new legislation, the tax increase is applied retrospectively to January 2019.

 “Queensland’s resources sector pays its fair share of tax and we are ready to work in close consultation with the State Government on its plan for a longer term gas royalty review.

“We are also seeking a meeting with the Treasurer to discuss a longer term freeze on coal and mineral royalty taxes.

"Queensland’s reputation as a safe place to invest depends upon stable and transparent laws and regulations and a commitment to open and good faith consultation.”

 Queensland’s oil and gas industry supports more than 39,000 full time jobs, both directly and in supporting industries, according to the QRC

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The Queensland Resources Council has welcomed the approval from the Queensland Department of Environment and Science for the Adani Groundwater Dependent Ecosystems Management Plan.

QRC Chief Executive Ian Macfarlane said the finalisation of the plan meant the project could now get underway and start delivering returns to Queensland.

“Every investment in resources projects benefits all Queenslanders. Our resources sector employs more than 315,000 people, mainly in regional Queensland, and this year alone is returning $5.2 billion to the state budget,” Mr Macfarlane said.

“All Queenslanders should welcome new investments in resources projects whether they’re coal, gas or other minerals.

“The Adani Carmichael mine is one of six in the Galilee Basin that could create tens of thousands of jobs in construction and operation and deliver billions of dollars in royalties over their working life span.

“Mining jobs are typically highly skilled, high-tech and high-paying, and they support local communities across Queensland. The mining sector also provides economic returns and career opportunities for Indigenous Australians.

“Resources projects in Queensland are subjected to rigorous approval processes to ensure they proceed in a way that benefits our state and deliver world-leading environmental outcomes.

“Each project should be reviewed according to consistent requirements and on consistent timetables.

“QRC welcomes the recent decision from the Premier to ensure the Coordinator-General plays an overarching role for the approvals process, and we welcome the LNP’s commitment to a more structured approval process for mining projects.

“The Queensland Parliament should also act swiftly to reject the Greens’ job-destroying Mineral Resources (Galilee Basin) Amendment Bill 2018 (Qld) which wants to ban all mining in the Galilee.

“The Adani project has undergone eight years of planning and assessment at both the State and Commonwealth level.

“Everyone should accept this ruling and let the project proceed. Queenslanders have sent a very clear message that the stalling tactics of activists must stop.  

“Central Queenslanders and North Queenslanders are ready to get on with these jobs and deliver for our entire state.”

THE Queensland Resources Council (QRC) has called on the Palaszczuk Government to delay the implementation of any gas royalty increase to January 1, 2020 to allow industry and Government to work through confusion in the draft legislation. 

“As it currently stands, the 25% increase in gas royalties on domestic and export gas will damage industry viability and increase costs to the electricity and domestic processing and manufacturing sectors,” QRC chief executive Ian Macfarlane said.

“Increasing the cost of gas to Queensland businesses puts their viability and jobs at risk. Of particular concern is the retrospective introduction of the royalty increase to 1 January, 2019 which will be passed through as an additional charge to gas consumer companies which have already produced and sold their electricity and goods. 

“The gas industry understands its role in delivering returns for all Queenslanders, but the shock tax increase announced in this week’s budget will undo all the benefits Queensland has secured by being the only East Coast state to develop its own gas.

“We’re calling on the Premier and the Treasurer to hold off on any royalty increase until January 1 2020, instead of rushing it through the Parliament and adding to the existing confusion on domestic gas royalty impacts. 

“Currently, the legislation for the gas royalty increase risks pricing Australian LNG exports out of the international market and perversely making domestic gas more expensive for industry users here in Australia," Mr Macfarlane said.

"At the very least there should be an exemption for gas sold on the domestic market. We’re calling on the Treasurer to make that commitment as soon as possible.

“Queensland is the only East Coast state producing new gas resources to supply the domestic market. Given production in the Bass Strait is declining, that means Queensland gas will be more important than ever. 

“At the height of the East Coast gas supply squeeze, the ACCC said transport costs from Queensland to southern markets were already adding at least an extra $2 a gigajoule to the price for domestic users.

"Even though the price of gas has since come down from those peaks at which domestic users were being offered contracts at about $20 a gigajoule, nothing can reduce transport costs.

“Adding on the extra 25 percent royalty tax will mean more expensive gas for export and more expensive gas for domestic users.

“The QRC looks forward to meeting with Premier Palaszczuk and the Treasurer as soon as possible to address these significant concerns with the legislation.”

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NEW RULES requiring companies to prove they have a clean tax record when tendering for major government contracts is a welcome improvement, but more needs to be done to assist and protect small businesses subcontracted to these projects, the Australian Small Business and Family Enterprise Ombudsman Kate Carnell said.

From July 1, businesses tendering for Commonwealth contracts over $4 million will need to provide a statement from the ATO proving they have a satisfactory tax record.

“This is an important step to ensure businesses tendering for government projects are up-to-date with tax payments,” Ms Carnell said.

“It provides small businesses, particularly subcontractors who work further down the supply chain, with some security, but certainly more can be done in the procurement space.

“Small businesses rely on contracts being awarded to businesses that operate in a fair and sustainable manner.

 “The government should also require that tenderers use contracts with subcontractors that comply with unfair contract terms legislation and that all subcontractors are paid on time.

“If businesses do not comply, they should be banned from future tendering for a period of time.

“I will continue to argue the case for a level playing field and the need to give small business a fair go in the procurement process.”

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"IT IS pleasing to see that sanity has finally prevailed in the decision-making process on the Adani mine,” Australian Industry Group Queensland head Shane Rodgers said today.

“Ultimately there is nothing particularly special about the Adani proposal. It is an application to establish a mine in a state with a long history of mining and a heavy reliance on mining royalties to balance its books and support living standards. Adani deserved to be treated like any other company in these circumstances," he said.

"Aside from the merits of the project itself, this issue was being watched carefully by business and investors in Australia and overseas as a case study on the transparency and consistency of decision-making in Queensland. Investors in the state need to be certain that their investment is welcome here and there is a level playing field for everyone.

“Over time the energy mix will change, as will mining economics. In the meantime we need to make rational, timely decisions that support the investment climate in the state.

"We cannot let the extremes of philosophical discussion derail a sensible approach to transitioning industry in a way that supports the livelihoods of families and addresses important environment and climate change issues,” Mr Rodgers said. 

About Ai Group

The Australian Industry Group (Ai Group) is a peak employer organisation in Australia which represents the interests of thousands of businesses in an expanding range of industry sectors including: manufacturing; engineering; construction; food & beverage processing; transport & logistics; information technology; telecommunications; labour hire; and defence. Ai Group's influence crosses all areas of workplace development and sustainability.

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QUEENSLAND now has the highest tax rates in Australia for resources projects, undermining the state's hard-won reputation as a global commodity leader and risking the 315,000 jobs in the sector, Queensland Resources Council (QRC) chief executive Ian Macfarlane said today.

"The surprise 25 percent hike on gas royalty rates in the state budget, coupled with Queensland’s sliding scale for coal royalties, means the Palaszczuk Government oversees the highest rate tax grab on the resources sector in Australia,” Mr Macfarlane said.

“Hiking up gas royalty rates to a flat 12.5 percent will make Queensland the highest taxing state on the East Coast. It will even put the state out of kilter with gas-rich Western Australia, which has a tax range that starts at 10 percent and only increases to 12.5 per cent for secondary licences. Plus we now have the threat of a royalty review process hanging over Queensland’s second most valuable export industry.

“At current market prices, Queensland already has the highest rates of coal royalty taxes of any state in Australia, well above the other significant coal-producing state of NSW.  A tonne of high-quality Queensland coal pays 43 percent more in royalties than in NSW.  What signal does that send to investors?

“Queenslanders deserve a fair share from the development of our state’s resources.  At the end of the day those resources belong to all Queenslanders. But on existing tax rates resources projects already pay enormous dividends to the Palaszczuk Government.

“This financial year the Queensland Government is reaping $5.2 billion in resources royalty taxes. That includes $450 million in petroleum royalties. In the space of one year petroleum royalties have more than doubled from $187 million in 2017-18.

“Next financial year the resources sector will pay $5.45 billion to the Palaszczuk Government in royalty taxes.  The onus is on the Government to make sure that enormous tax revenue is spent fairly and wisely across the state – not resort to bigger tax grabs to fill budget black holes.

“By putting up royalty taxes with no warning and no consultation, Treasurer Jackie Trad is selling out the people of regional Queensland – because they are the ones who would be hardest hit by a loss of investment in resources.

“The Treasurer’s comments today that because royalty rates for gas have been frozen for 10 years means now is the time for industry to give back more shows a misunderstanding of the way resources projects work to the long-term benefit of all Queenslanders.

“Multi-billion dollar investments are made in resources projects over decades relying on clear rules for investment in order to create regional jobs and support for regional communities for the long haul.

“A tax hike out of the blue with no consultation just doesn’t pass muster.

“The Government cannot expect to be taken seriously as a state that welcomes international resources investment when it has shown it’s prepared to change the rules overnight with no warning and no consultation.”

BACKGROUND DETAILS

According to the QRC, figures from the ACCC show there has been a significant reduction in netback prices for LNG exporters, or the price an exporter can expect to receive for their gas. Since October 2018 the gas price has more than halved. In October 2018 the price was A$13.21 per gigajoule, while in June 2019 the price was $6.38 a gigajoule. Any extra tax impost will make Australian gas more expensive on the global market and therefore less competitive, Mr Macfarlane said.

Coal weekly spot prices last week were: Thermal coal US$71.50 (or A$102.14 with the dollar at 70 cents); coking coal US$198.63 (or A$283.76).

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THE Palaszczuk Government's shock decision in the State Budget to increase the rate of royalty taxes on gas by 25 percent threatens regional Queensland jobs, investment and exports, the Queensland Resources Council (QRC) has warned.

With resources royalties this year forecast to hit unprecedented highs of $5.45 billion, including $4.34 billion from coal, QRC chief executive Ian Macfarlane said the Palaszczuk Government had betrayed the trust of the 315,000 Queenslanders who work in the resources sector, especially in regional Queensland.

“Premier Annastacia Palaszczuk and Treasurer Jackie Trad have broken a promise and broken their word to regional Queenslanders,” Mr Macfarlane said.

 “Regional Queenslanders will be at a loss to understand how they can trust a Government that says one thing one week, and something completely different the next. In Townsville two weeks ago the Premier said: ‘there will be no royalty increase in this year’s budget’.

 “Today we discover that’s not the case," Mr Macfarlance said.

“After weeks of refusing to rule out hiking coal royalty rates, the Palaszczuk Government has blindsided the resources sector with an increase in royalty taxes from 10 percent to 12.5 percent on petroleum including liquefied natural gas (LNG) extracted in western Queensland and exported from Gladstone.

 “This will make Queensland gas less competitive and will risk jobs and future investment and the creation of new jobs. It will also make lower emission energy generated from gas more expensive and increase the cost of gas to manufacturers such as Incitec Pivot in Brisbane," he said.

“To make matters worse, Queensland is the only state on the East Coast that is developing its gas resources.  This tax hike risks the gas supply for all Australians, not only Queenslanders, given Queensland gas suppliers have been doing all the heavy lifting for the gas market.

“Billions were poured in Queensland’s world-leading gas industry based on export models, while at the same time supplying the gas that domestic manufacturers need to sustain their industries and protect jobs. Today’s royalty tax increase casts a dark cloud over future growth in the Queensland gas industry. 

“In Parliament today the Premier, the Treasurer and other Ministers repeatedly said they backed Queensland jobs.  But this tax hike on the gas industry means they are risking jobs.

"As Trade Minister, the Premier has recently lauded the role of LNG in driving Queensland exports to record levels.  To apply an extra tax to gas undermines Queensland's trading performance, future investment, and current and future jobs in regional Queensland.”

Mr Macfarlance said tast month, the Premier had said: "Our commodities, from LNG to beef, are delivering valuable export dollars to Queensland and supporting thousands of jobs".

“The best policy comes only through consultation.  Unfortunately the Palaszczuk Government has failed that test,” Mr Macfarlane said.

“The Premier recently said she was fed up with the way her Government was handling resources approvals. Well Queenslanders are fed up with the mixed messages from the Palaszczuk Government.

“Either you back resources jobs, or you don’t.  And right now the only evidence is that the Palaszczuk Government doesn’t back long-term jobs in the resource sector.

“The LNP has committed to a royalty freeze through until the end of the next term of Parliament if it wins the election.  This would provide royalty tax stability through until October 2024. The QRC has urged the Palaszczuk Government to match that commitment and we will continue to do so.

“There is no case for increasing the rates of royalty taxes paid by resources companies.  At current market prices, Queensland already has the highest rates of coal royalty taxes of any state in Australia.

"This means that when prices are high all Queenslanders benefit from greater returns.

“By changing the royalty rate structure Queensland risks losing its competitiveness in global commodity markets. In effect, the Palaszczuk Government is threatening the goose that lays the golden egg.  And as today’s budget illustrates, Queensland cannot afford to do that.”

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THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed changes to the Small Business Development Corporation Act 1983 tabled by Small Business Minister Paul Papalia in the Western Australian Parliament on June 11.

The amendments will boost the powers of WA’s Small Business Commissioner David Eaton to receive and investigate complaints of mistreatment of subcontractors and small businesses on construction projects.

The reforms will also underpin the establishment of a specialised investigations and inquiry unit within the Small Business Development Corporation (SBDC) aimed at improving corporate and government behaviour and removing unfair practices.

“This legislation is a step in the right direction,” Ms Carnell said. ”Both Minister Papalia, and Commissioner Eaton have been advocating in this space for a number of years.

The Bill will expand the Commissioner’s current investigative and reporting functions enabling him to consider the actions of the private, local and state government sectors that affect the commercial activity of small business.

Ms Carnell also welcomed plans for WA to become the first state to establish statutory trusts to protect payments to subcontractors.

“These are two pieces of legislation that will increase protections for subcontractors and small businesses,” Ms Carnell said.

WA Attorney-General John Quigley is preparing a cabinet submission on statutory trusts to be presented later this year, in preparation for tabling in Parliament early next year.

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