Upper Hunter MP Dave Layzell has joined the NSW Minerals Council in slamming the NSW Government’s plans to increase coal royalties.

The local member, whose electorate oversees the state’s biggest mining towns – Muswellbrook and Singleton, described the hike as an “outrageously” lazy effort to fund future budgets while the industry’s association believes the decision will impose a significant additional burden on producers at an already challenging time.

Treasurer Daniel Mookhey recently announced fees would rise by 2.6% from July 2024 in a move expected to deliver $2.7 billion into the government’s coffers over four years.

“I’d like him (Mr Mookhey) to explain his claims that the existing system is out of date and that the market has moved on,” Mr Layzell said.

“The 2.6% coal royalties increase will see mines in Muswellbrook and Singleton provide even more cash to the NSW Government.”

Mr Layzell claimed the NSW Treasury had previously told MPs, in writing, that the two Upper Hunter LGAs contributed more than 50% of the state’s mining revenue annually.

“Published figures show coal royalties between the 2015-16 and 2021-22 financial years totalled almost $12.5 billion,” he said.

“Premier Chris Minns and Mr Mookhey must now come clean with my electorate and NSW regional mining communities on the future for the former Nationals-Liberals’ Resources for Regions program.

“Unless I am mistaken, the change to improve the state’s budget position by more than $2.7 billion over the four years to 2028 is simply about grabbing low hanging fruit to beef-up consolidated revenue.

“I, like a lot of people in NSW, are waiting for Tuesday 19 September to hear more of the Minns government’s explanation of its budget repair plan.”

Mr Layzell recently told Parliament the NSW Government needed to acknowledge the Upper Hunter’s “lifters” in the budget by finding money to complete the Muswellbrook Hospital redevelopment, which is continuing a decade after planning began.

NSW Minerals Council CEO Stephen Galilee is also keen for some answers.

The industry directly employs nearly 30,000 people in NSW and supports 180,000 indirect jobs, while almost 7,000 NSW businesses are part of the mining supply chain.

“Coal remains NSW’s most valuable export commodity by far and continues to deliver over 70% of electricity used in homes and businesses across the state,” he said.

While realistic about the likelihood of an increase in royalty rates, the NSW Minerals Council and producers maintained throughout the NSW Government’s consultation process that the current royalty structure and rates were appropriate for NSW and, therefore, should be retained.

“It is acknowledged the coal sector has an important role to play in relation to royalties, particularly in relation to repair of the NSW Budget, and the industry takes its royalty and taxation obligations seriously,” Mr Galilee said.

“However, the rate increases announced will mean NSW coal producers will pay at least 30% or more in royalties than under the existing arrangements, continuously throughout the commodity price cycle, including when coal prices are low.

“This would be a significant additional cost for any business or industry to manage.

“It’ll present challenges for coal producers facing higher operating costs, including from the introduction of the commonwealth government’s Safeguard Mechanism.

“Confirmation that the coal cap and related reservation measures will end as legislated is welcome.

“The coal cap is poor public policy that has done nothing to reduce power prices, which have continued to increase, despite a significant fall in global coal prices since the cap was introduced.

“The associated reservation measures were also unnecessary.

“The industry appreciates the opportunity to engage constructively with the NSW Government during the consultation process… and will continue to do so.”

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