AN extra $2.0 billion in coal royalties - mostly from mines exporting through Newcastle - is the biggest driver of extra government revenue in today's half-yearly budget review.
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The half-yearly review was published today by Treasurer Matt Kean, who said that inflation appeared to have peaked in the December quarter.
Deputy Premier Paul Toole also reconfirmed that the Coalition had no intention of raising the percentage rates on coal royalties in NSW, which were well below those of Queensland even before it introduced higher "super profits" royalty rates last year.
The Newcastle Herald reported this pledge, and a Labor promise to match it, last week.
Unveiling the half-yearly update today, Mr Kean said the budget was on track track to return to surplus in 2024-25 and 2025-26.
"Estimated total revenue in 2023-24 has been revised upwards relative to expectations at (the June) Budget, though this has been more than offset by higher estimated expenses to support flood recovery and address ongoing pressures stemming from COVID-19," Mr Kean said.
Coal royalties totalled $3.6 billion last year.
The half-yearly review says: "Mineral royalties have been revised up by $2.0 billion (49.5 per cent) in 202223 and by $6.1 billion (55.1 per cent) over the four years to 202526.
"The revision is largely due to a surge in global thermal coal prices following Russia's invasion of Ukraine.
"Coal prices are expected to remain well above long-run average until the second half of 2023, and then begin to normalise in 2024 at a level above long-run average.
"This upgrade is partly offset by weaker production levels, which have been impacted by heavy rainfall over the second half of 2022.
The outlook for coal royalties is subject to greater uncertainty than usual and recent developments indicate downside risks to the outlook."
NSW Minerals Council chief executive Stephen Galilee said the royalty pledge by Mr Toole was "an acknowledgement of the heavy burden being borne by NSW coal producers impacted by the coal price cap policy".
"The Deputy Premier's commitment follows Treasurer Matt Kean's support for the NSW coal industry last week, promising not to raise coal royalties in the next budget if re-elected," Mr Galilee said.
Mr Galilee said the commitment was welcome, given that the budget update showed royalties would deliver a record $6 billion this year alone.
"This is $2 billion higher than previous Treasury forecasts, representing a significant windfall for the NSW Government this year due to high global coal export prices," Mr Galilee said.
"The current royalty rates are clearly working to deliver higher returns for the people of NSW when global coal prices are higher.
"NSW mining royalty revenues have grown significantly in recent years, rising from $1.4 billion in 2020-21 to $3.7 billion in 2021-22, and now to $6 billion in this financial year.
"This means mining royalties are set to contribute 6 percent of total NSW government revenues this financial year, up from just 1.6 percent in 2020-21.
"At least part of this additional $2 billion in windfall royalty revenues could have been used to provide energy price relief in a much simpler, logical and direct manner than the complicated and problematic coal price cap arrangements being imposed on the sector."
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Ian Kirkwood
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
