Coal royalties will be hiked in New South Wales (NSW) for the first time in nearly 15 years, delivering a billion-dollar boost for the state’s ailing budget.
Treasurer Daniel Mookhey on Sept. 6 revealed coal royalties would be increased by 2.6 percentage points from July next year, delivering taxpayers an expected windfall amid high global coal prices.
The change would leave the state budget more than $2.7 billion better off over the four years from 2024/25 onwards, the government said.
It will replace an emergency domestic coal cap put in place by the former coalition government in December last year.
That measure to limit the wholesale price of coal was rolled out in an attempt to bring spiralling power costs under control as the war in Ukraine sent shockwaves through the global energy market.
The new coal royalty rate in the state will be up to 10.8 percent, with discounts applied for underground mines.
The government said the change was developed after consultation with the mining industry and key trading partners.
Labor pledged during the election campaign not to increase coal royalties for the current financial year.
Mr Mookhey said the shift was a fair outcome for the state, and it replaced an out-of-date royalty regime, which was last updated in 2009.
“The new scheme will make sure the people of NSW share in the wealth their resources create,” he said.
The money would be spent on essential services and providing cost-of-living relief to families, the government said.
The Minns Labor government has been priming taxpayers for a brutal budget, weighed down by growing debt, rising interest rates and a fast-rising bill for public sector pay increases.
Mr. Mookhey previously said the state’s two remaining AAA credit ratings were under pressure, with the budget forecast to be $12 billion in deficit for 2022/23.
The shift in coal royalties for NSW comes as resource-rich states bask in budget surpluses on the back of high commodity prices.
Queensland recorded a $12.3 billion surplus for the last financial year, the largest of any state or territory.
Its state Labor government last year introduced new, progressive royalty rates that brought in billions more in tax revenue.
By Peter Bodkin and Duncan Murray
