Record mining revenue helps NSW Budget undermined by GST rip-off

Statement from NSW Minerals Council CEO Stephen Galilee

An increase in mining royalty revenues, driven by higher coal exports and royalty rates, is helping the NSW Government manage a Budget undermined by the Commonwealth’s GST rip-off.

The NSW Government is grappling with a $12 billion downgrade in GST revenues from the Commonwealth compared to the 2023-24 half-yearly budget review.

At the same time, mining royalties are forecast to deliver the NSW government $13.3 billion over next four years, an increase of $481m on previous estimates after minor increases in allowable deductions are taken into account.

This represents a record return for NSW from mining over the forward estimates, including $2.4 billion in additional royalty revenue over the next three years from higher coal royalty rates commencing in July this year.

The loss of $12 billion in GST revenue is a terrible blow for the NSW Budget. It also highlights the critical importance of the expected $13 billion in mining revenues over the same period, and just how damaging the loss of this revenue would also be for NSW.

Fortunately for NSW, mining royalty revenues are expected to remain strong. According to the Budget papers,  “Stronger export volumes are also expected to contribute to royalty revenues, with signalling from key Asian markets of continued reliance on thermal coal to meet energy demand.”

The Budget also confirms the NSW Government’s commitment to long-term planning for the future of coal mining regions, with funding allocated for Future Jobs and Investment Authorities in four coal mining regions.

While planning for the future is prudent, the medium term outlook for NSW coal exports is positive.

Nearly 90 percent of NSW coal is exported to more than 20 countries overseas, and as the Budget Papers note, demand in key Asian markets is likely to continue for many years.

Reflecting this strong export demand, there are nearly forty coal mines currently operating across NSW, including seventeen in the Hunter region, with most involved in export coal markets.

Fifteen Upper Hunter mines either have approvals in place or are seeking approvals to continue mining to 2035 or beyond, with several seeking extensions to operate beyond 2040.

Beyond the Upper Hunter, another fifteen NSW coal mines either have approvals in place or are seeking approvals to continue mining into the 2030s, with six either approved or seeking approval to operate until 2040, and several seeking extensions to operate well beyond 2040.

This strong outlook provides time to plan for the future while the economic benefits and jobs continue.

The small number of NSW mining operations most likely to be affected by market changes in the short to medium term are those dependent on supplying coal to local power stations.

With most remaining NSW power stations forecast to close over the next decade, the impacts on these workers and their communities should be prioritised in future transition planning.

Transition planning should also ensure existing coal mining operations are supported for as long as global demand for our export coal remains, not forced to close prematurely due to activist pressure.

The NSW Government must also ensure appropriate support is given to the ongoing development of metals and critical minerals mining operations, particularly in the Central West and Far West of NSW.

With several NSW Government-approved new metals mines now enduring lengthy delays awaiting Commonwealth approvals, it is vital the NSW Government does everything possible to secure these and other new mines to support the long-term future of a strong mining sector in NSW.

The allocation of $128.5m to upgrade regional roads impacted by renewable energy developments will be welcomed by regional mining communities already being impacted, particularly in the Hunter.

This will help address a major oversight in the Renewable Energy Zone plans, which failed to take into account the capacity of regional roads to handle related transport requirements.

The allocation of an additional $50m to the Regional Development Trust is also welcome. However, given the record royalty revenues being delivered by mining, it is disappointing there is no specific funding allocated to replace the ‘Resources for Regions’ program scrapped in last years’ Budget.

This is an ongoing issue for mining communities across NSW, and one that must be addressed.

Without a specific funding allocation for mining communities to replace the former ‘Resources for Regions’ program, future planning initiatives for mining regions will continue to be seen as just another layer of expensive bureaucracy.

Contact: Brad Emery | bemery@nswmining.com.au | 0450620254