A year ago, common logic suggested the Queensland government was taking a huge political risk by increasing royalties on record-high coal prices, and picking a fight with the cashed-up mining sector.
Plans to increase taxes on the miners have been historically fraught. Meanwhile, the wounds inflicted on Labor by the Adani saga still feel fresh.
And this is Queensland, where the black rock is still king, and critical to the state’s economy and its identity.
Cameron Dick’s latest budget, flush with $15.3bn income from coal royalties, has brought the bigger picture into focus.
Labor is running a version of Muhammad Ali’s famous “rope a dope” strategy – inviting superficial attacks and leaving opponents’ weaknesses badly exposed.
Everything voters might want – a budget surplus, debt reduction, cost-of-living handouts, infrastructure projects, new housing, health funding – is now linked to the decision to increase royalties on unprecedented profits.
In Dick’s words, the royalties “underpin everything that we are doing”.
“A Queensland without progressive coal royalties … means there will be no cost-of-living relief, cancelled infrastructure programs, cuts to services, and a higher debt burden.
“You can’t have a credible opinion on this budget without having a credible opinion on royalties. [Opposition leader David Crisafulli] needs to accept that, or he needs to start cutting back on the $89bn capital program and tell Queenslanders what he’s not going to build.”
If this is starting to sound familiar, it’s because it is. These are versions of the same attack lines on potential LNP cuts that Labor used in 2020. And 2017. And 2015. The only thing missing was the dark spectre of Campbell Newman, dressed like death and carrying a scythe.
Labor uses these lines again and again because they are effective. Queenslanders want public services and publicly-owned assets.
If the LNP opposition offers anything other than full-throated support for the coal royalties, they’ll be fodder for Labor’s attacks (and scares) about hidden cuts.
Last year, Dick warned the mining industry that its campaign – reportedly costing $40m in advertising – could backfire and damage the sector’s social licence.
On Monday, the day before the state budget, Dick told the Queensland Resources Council to “show some respect” while coalminers were making record profits and households were struggling with the cost of living.
There is no question that the decision to increase royalties has put Queensland on a stronger economic footing coming out of the pandemic. It has helped the state pay for significant cost-of-living relief measures and long-overdue programs like free kindy for preschoolers.
But the true irony here is that, by the next election, the impact of the state’s royalty changes will have largely disappeared. The system was designed so that miners paid higher rates while export prices were at extraordinary and record highs. When global shocks end, and coal prices return to normal, so do the royalty rates. Subsequently, most of the spending is on one-off measures.
Over the next four years, the state budget anticipates “a sharp decline” in coal prices and for royalties income to drop below long-term averages.
Most of the extra money being fought over is already in the coffers. So by the time all of this public debate has played out, on election day in October next year, the argument will be largely academic anyway.
