Queensland's coal royalty pantomime

On 24 May 2024, the Queensland Government released the Progressive Coal Royalties Protection (Keep Them in the Bank) Bill 2024 (the Bill) and announced its intention to amend the coal royalty regime under the Mineral Resources Act 1989 (Qld) (the MRA).¹ The Bill notionally proposes the introduction of a new section 321AA into the MRA to prevent future governments from prescribing coal royalty rates lower than what is currently in effect under the Mineral Resources Regulation 2013 (Qld) (the MRR).²

This Bill follows on from significant changes to the MRR in June 2022.³ Such changes saw Queensland diverge from a relatively national royalty policy in favour of new progressive coal royalty tiers giving Queensland the highest coal royalty rates in the world – a strange position for a State reliant on the mining industry.⁴

The coal royalty regime

The coal royalty regime under the MRR mandates a royalty payable on coal sold, disposed of or used in a return period.⁵ Royalties are calculated by multiplying the applicable royalty rate by the value of coal. The royalty rate for a return period is determined by reference to the average price per tonne of the coal sold, disposed of or used in that period.⁶ The current royalty rates are:⁷ 

Rationale behind amendments

As the progressive coal royalty rates are prescribed under subordinate legislation, the MRR, they are notionally subject to change by future governments.⁸  

The current Queensland government claims that if this was done without adequate public or parliamentary scrutiny, Queensland would suffer significant revenue losses. Therefore, the two-fold effect of section 321AA, if introduced, aims to defend against this by requiring:

(a)    future governments to only prescribe royalty rates higher than what is currently in effect under the MRR; and

(b)    should a future government wish to lower the royalty rate, they must amend the MRA, which requires a two-stage Parliamentary approval. 

If passed, the amendments will commence upon assent.

Commentary

The Bill is a political stunt with no substantive policy purpose. If a Government wishes to change the royalty rates, it is open to do so through an Act of parliament. The Bill does little to hamstring future governments. Every proposed, contemplated and actual royalty change in Queensland in modern times has been the subject of much public debate. Given the Government’s stated desire for transparency, it’s ironic that the 2022 royalty regime amendments were introduced by the Queensland government without any public consultation or opportunity for public debate (contrary to all of their State counterparts).

If only the same effort were applied to matters such as the State’s critical mineral policy and attracting mining investment.

References

1. Progressive Coal Royalties Protection (Keep Them in the Bank) Bill 2024 cl 3.
2. Progressive Coal Royalties Protection (Keep Them in the Bank) Bill 2024 cl 3.
3. HSF Insight <https://www.herbertsmithfreehills.com/notes/mining/2022-06/queensland-state-coal-royalties-out-of-step-with-all-other-jurisdictions/>.
4. HSF Insight <https://www.herbertsmithfreehills.com/notes/mining/2022-06/queensland-state-coal-royalties-out-of-step-with-all-other-jurisdictions/>.
5. Mineral Resources Regulation 2013 (Qld) s 46.
6. Ibid.
7. HSF Insight <https://www.herbertsmithfreehills.com/notes/mining/2022-06/queensland-state-coal-royalties-out-of-step-with-all-other-jurisdictions/>.
8. Mineral Resources Act 1989 (Qld) s 417.
9. Explanatory Notes to the Progressive Coal Royalties Protection (Keep Them in the Bank) Bill 2024.