On election eve, polling suggests the Queensland Labor government which has ruled the state for much of the last 35 years is likely to lose power, and if such a scenario does take place, the political arm of the trade union movement may have to reassess its relationship with the mining sector.
In the space of five years, the decision by federal Labor to be anti-mining in Melbourne and pro-coal in Mackay and Townsville served as a key reminder of what happens when a political party takes the resources sector for granted.
Kevin Rudd’s time as prime minister came to an abrupt end after his colleagues decided he had to go and a poorly designed rent resources tax enraged the sector in Western Australia.
In Queensland, the state government instead of opting for fiscal prudence has undertaken one of the greatest cash splurges in living memory, making a mockery of financial discipline and setting the state on the path of a debt pile approaching $180 billion over the next five years.
The spending splurge has been facilitated by a royalty tax increase that tops 40% in some cases and turned the state’s most prosperous industry into a cash collection centre in order to facilitate a sad number of populist thought bubbles including mass subsidised electricity, bills and now school lunches.
Royalty increases are based on the market price of coal and, like previous resources tax packages, designed to capture more revenue during commodity booms.
Coal companies reconsidering or delaying new projects is now the headline grabber.
With major mining firms announcing the suspension or cancellation of coking coal ventures, the potential for a coal shortfall within the next decade is growing more real.
BHP (ASX:BHP) has indicated its project ambition in the state is now off the table despite an extraordinary threat from Treasurer Cameron Dick to strip the company of its assets if it ceased investment in the state.
Unsurprisingly, the reaction from the Queensland Resources Council has been to mount a campaign urging the government to rethink its position.
For Queensland, where coal remains the bedrock of both its economy and political discourse, this election represents a pivotal moment for miners and industry stakeholders alike.
The difference this time round is that mining associations have taken a leaf out of the Labor playbook and organised themselves to launch a counter offensive during the election campaign to remind voters who effectively pays the bills.
Grant Wechsel, Chairman of Mining Pro, told Mining.com.au the industry faced an own goal moment by failing to nurture such a valuable part of the Australian economy.
“The reality is that the industry produces metallurgical coal, a key ingredient in steel, and no other industry is capable of replicating the contribution resources make to the state,” Wechsel told this news service.
“Coking coal, critical to steelmaking, has been a cornerstone of Queensland’s exports.
“More than 70% of coal from Queensland — more than 200 million tonnes — is steelmaking coal, and the state is at risk of shutting it down over political expediency.”
Queensland goes to the polls on October 26.
Dan Petrie is Mining.com.au’s Head of Data, a former data editor at Bloomberg LP, analyst at Macquarie Bank and contributing data expert to Google Digital News Academy.
Images: Mining.com.au & Unsplash
