Surging coal revenue boosts Budget outlook

A lift in coking coal prices and strong property sector have delivered a boost in revenue for the State Government, which has slashed its forecast deficit for 2021-22. State taxation and royalties are expected to be $8.1 billion higher over the forward estimates than forecast at the time of the 2021–22 Budget. Stronger than expected coking coal prices alone have delivered an extra $2.9 billion in royalties to the State budget. QRC chief executive Ian Macfarlane. The Queensland Resources Council said total royalties contributed by the state's resources sector in the 2021-22 financial year were now expected to hit a record of about $6.1 billion. QRC chief executive Ian Macfarlane said Treasurer Cameron Dick’s announcement that $2.5 billion of this royalty windfall will be invested in a long-term asset to earn more money for Queensland was a smart move. Related: Anglo revisits Moranbah South mine proposal “Queensland coal producers pay the highest royalty rates in the world, so it’s good to see these royalties being managed responsibly to maximise the benefits to Queensland in the long-term," he said. “Commodity price rises are a win-win for our sector and for every Queenslander - as prices go up, so too does the amount the resources industry automatically pays in royalties to the State Government.” Mr Macfarlane said the QRC was keen to hear more details about the purpose of the new investment fund and would advocate for resources communities to benefit from royalties generated in regional Queensland. Since the Budget was handed down in June, coal prices in the spot market have reached historic highs for both thermal and metallurgical coal. The premium hard coking coal price increased from $US173.25 per tonne on June 15 to $US408 per tonne on September 22, the first time the price has breached $US400 per tonne since the price series commenced in 2013. The hard coking coal spot price moderated somewhat throughout November falling from $US403 at the start of November to as low as $US315.50 by early-December, as supply constraints eased somewhat and demand from China fell following declines in steel production. Related: Anglo update on coal sites, $300m washplant plan In the thermal coal market, the spot price for benchmark Australian coal increased from $US74.50 per tonne on June 15 to a peak of $US179.05 per tonne in October, the highest spot price in the eight-year history. However it had fallen to US$97.50 by early December Treasury warns that coal prices are expected to return to more sustainable levels over the coming months as the short-term supply disruptions unwind, although the timing and extent of the decline remains uncertain. Releasing the state's Budget Update, Mr Dick said that on almost every metric, Queensland was either outperforming the national average or the best state in its own right. “Revenues are higher for this year and our deficit and debt are lower than had been forecast in June," he said. Budget Update highlights include: Queensland’s economic growth is expected to strengthen further to 3¼ per cent in 2021–22, stronger than the 2¾ per cent growth forecast at Budget.Year-average employment growth is forecast to strengthen to 4½ per cent in 2021–22, well above the 3 per cent forecast at Budget, to be the strongest employment growth in 15 years.The deficit for 2021–22 is expected to be $1.492 billion, less than half the $3.485 billion forecast at Budget.The budget position is stronger in each subsequent year of the forward estimates is slightly stronger compared to the 2021–22 Budget, with a return to surplus still forecast in in 2024–25.Net debt is expected to be $7.2 billion lower than was forecast at the 2021–22 Budget.Revenue has been revised upwards across from 2022–23 to 2024–25 compared to the 2021–22 Budget, reflecting a stronger outlook for the housing and labour markets.

Surging coal revenue boosts Budget outlook

Industry Queensland

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