Mining industry foes would leave us with fewer roads, hospitals and schools

Coal and gas royalty payments from mining companies are a major revenue stream for state governments; and those royalties help fund essential services such as health and education.  

Yet there is a growing hostility to mining in some parts of the community, and a risk that policy makers could throttle an industry that contributes substantially to our economy and government budgets.  

Royalty revenues fluctuate with commodity prices and export volumes. In 2022-23, Queensland earned a record $15.4 billion in coal royalties due to very high coal prices and after the previous state government increased royalty rates; risking future investment in the sector.  

Across the states, coal, oil and gas royalties will exceed $38 billion over the next four years (2024-25 to 2027-28) — over $9.5 billion each year. This income forms a significant part of state budgets and goes into consolidated revenue to fund public services. Through horizontal fiscal equalisation overseen by the Grants Commission, this revenue ends up benefiting all states.  

Furthermore, given the significance of federal grants in state budgets, state governments also benefit from the federal offshore petroleum resource rent tax (PRRT) revenue, amounting to a projected $6.4 billion over the next four years.  

The average annual $9.5 billion could fund the construction of seven or eight new city hospitals, 25 to 30 new regional hospitals or 60 to 70 new schools. This is based on recent costs of constructing hospitals and schools, such as the $1.3 billion Toowoomba Hospital, $320 million Mount Barker Hospital, and the $154 million Brisbane South State Secondary College.   

If coal and gas royalty revenue were unavailable, state governments would need to raise more money elsewhere, such as through higher motor vehicle registration or payroll taxes. There is a risk they would increase taxes or charges that are damaging to work and investment incentives and economic activity.  

This is not to say that our taxation settings for minerals are perfect. Indeed, they have been highly contested. Recall the debate over the Resources Super Profits Tax during the time of the Rudd Government. The appropriate way to profit as our community from our resources is up for ongoing debate, and there may be better ways. But we shouldn’t let the perfect be the enemy of the good, and we should recognise the large contributions to state budget coffers made by our current royalty regimes.  

If Australian governments ban coal mining or gas extraction, they deny the community the opportunity to share in the wealth generated from extracting these valuable resources from the ground and selling them to a world market hungry for energy.  

The International Energy Agency has reported that coal production reached a record high in 2024. Australia can continue to supply the world with coal, gas and mineral resources to meet global energy and manufacturing input needs.  

And if we do, the Australian nation and community will continue to benefit handsomely from the royalties.  

Gene Tunny is an Adjunct Fellow at the Centre for Independent Studies and the founder of Adept Economics. 

Photo by Tom Fisk