Proposed additional taxes on NSW thermal coal exports

Statement from NSW Minerals Council CEO Stephen Galilee

Proposals being considered by the Federal Government for an additional tax on thermal coal exports, as reported in The Australian today, would harm the NSW economy and NSW coal mining communities.

Such a move would also be a significant broken election promise, unlikely to be temporary, and would potentially be extended to other sections of the mining industry over time.

It would follow other policy decisions impacting the sector, including industrial relations changes, the safeguard mechanism, the methane emissions pledge, and the decision to review EPBC approvals for a range of resources projects, including in NSW. This series of policy decisions threatens the competitiveness of the NSW coal export sector, potentially costing jobs, deterring investment, and disrupting energy supply for our key trading partners, all at a time of increasing industry costs.

The mining sector is already Australia’s largest taxpayer, delivering nearly 40 percent of the more than $68bn in company taxes paid to the federal government in 2020-21.

In NSW, taxes paid by the coal sector have also been increasing, with coal mining royalties at record levels. Coal royalty rates in NSW are already higher than for other minerals, and coal royalties are expected to raise over $4 billion this financial year, more than double two years ago. This is in addition to a wide range of other taxes, payments and levies paid to the NSW Government totalling well over $200 million each year.

Coal is also NSW’s most valuable export by far. Imposing additional costs through even more taxes on NSW thermal coal exports would reduce the competitiveness of NSW thermal coal exports, damaging the NSW economy, and harming longstanding trading relationships. This would also have significant implications for other export commodities across a range of sectors.

Ultimately, imposing additional taxes on NSW thermal coal exports would harm mining communities, particularly in the Hunter region. NSW coal producers have worked hard in recent years to strengthen industry performance. This helped the sector to generally continue operations during two years of the pandemic, providing jobs and economic activity when most needed in mining communities across NSW.

Strong industry conditions over recent times have also helped offset losses sustained during inevitable commodity cycle downturns, as experienced at least twice in the last decade. Recent strong conditions have also delivered higher direct spending by the sector across NSW with supplier businesses, and more mining jobs, including in the Hunter.

A new, additional tax on the NSW thermal coal export sector would put all this at risk, and will be strongly resisted by the sector on behalf of NSW mining communities.

Contact: Brad Emery