Queensland puts faith in mining, LNG

THE Queensland government has kept its developing resources industry happy with its state budget, handed down on Tuesday.
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Andrew Snelling

The government effectively chose to ignore the results of a $6 million public consultation program that asked whether it should sell state effects or increase taxes on the gaming and mining industries, choosing to sell $33.6 billion worth of public assets.

On the auctioneer’s plate are electricity companies CS Energy and Stanwell, SunWater industrial pipelines, long-term leases for the Gladstone Port Corporation and Townsville Port and an invitation for private sector investment in the state’s electricity network.

In the wake of the consultation program Queensland Treasurer Tim Nicholls said public opinion results would be just one consideration in the government’s decision on asset sales and it would ultimately be guided by the state’s best interest as it looked to rid itself of $80 billion worth of debt.

It seems the government places its faith in the state’s LNG refineries, which are set to flow this year, with the royalties from production over 2014-15 set to lift the government’s take from $68 million to $199 million.

“In 2015-16, the ramp-up in LNG production is expected to underpin a surge in exports which, combined with an improved domestic economy, is forecast to boost economic growth to an 11-year high of around 6%,” Nicholls said in his budget speech on Monday.

“This will be the highest in the nation.”

The Australian Petroleum Production and Exploration Association is happy with the result, having called on the government to go down the path of asset sales.

“A significant portion of the more than $2.8 billion in resources industry revenue in 2014-15 will be coming directly from the gas industry,” APPEA eastern Australia chief operating officer Paul Fennelly said.

“In fact, if resource industry royalty payments were spent solely on education they would fund almost 40% of Queensland’s entire education budget.

“The Queensland government, in stark comparison to New South Wales and Victoria, continues to show strong leadership.

“The result is that the people of Queensland benefit from the development of a new industry under strong and sensible regulations.”

The Association of Mining and Exploration Companies is singing the same praises, welcoming the stay on royalties.

“In the face of globally difficult investment markets for mid-tier miners and explorers, the Queensland government has recognised the issues facing AMEC members and resisted raising royalties in an attempt to balance the budget,” AMEC regional manager Bernie Hogan said.

“Through the strong choices program, the Treasurer and Minister for Trade Tim Nicholls has received a clear message that Queenslanders understand the importance of the mineral exploration and mining sector.

“To continually raise taxes on this sector will not secure the state’s prosperity for years to come.”