When is a levy not a tax? Last week, Queensland Treasurer Jackie Trad announced a new “voluntary” levy on the mining sector, designed to provide infrastructure to mining communities.
The Resources Community Infrastructure Fund has been created to raise $70m in revenue. I have my doubts that any of the money raised by this levy will go to the communities for which it is being collected, rather it will cover a budget shortfall created by overspends on IT, a ballooning public service, hospital name changes and pouring money into the southeast corner’s train system without getting them to run on time.
This levy is a tax.
It is also not voluntary. Treasurer Trad has said openly that if mining companies don’t pay it, she’ll find another way to get the money out of them.
It is a classic shakedown. She’s made them an offer they can’t refuse.
Treasurer Trad knows she can’t raise mining royalties without losing more GST. Last month’s Commonwealth Grants Commission 2019 update assessed the Queensland Government’s ability to earn had improved due to an increase in coal royalties.
The amount of royalties our state receives factors directly into the share of the GST pie that Queensland receives.
As royalties go up, our GST payments go down.
Her increases to mining royalties over the past years, while the sector has been rebuilding after the latest mining downturn, have triggered a reduction in GST from 22 per cent to 21.1 per cent. This is the biggest drop in GST of all the states and territories and over the next four years Queensland will see $772 million less in GST revenue.
But with poor budget management seeing Queensland’s total debt reach $83.5 billion within the next two years – more than half a billion higher than was estimated in the Budget – Trad is desperate to extract as much cash as she can from both the Commonwealth and the mining sector.
If the mining sector calls her bluff and refuses to pay the “voluntary” levy, it’s likely she’ll again raise mining royalties, breaking her promise to freeze royalties for the next three years.
Treasurer Trad is trying to circumvent the inevitable reduction of GST from the CGC by calling this tax a “voluntary levy”, mixing it with $30 million of other taxpayers money and calling it an infrastructure fund.
Head of the Queensland Resources Council Ian Macfarlane has suggested mining companies call the Treasurer’s bluff and decline to pay the levy. He’s right: if this tax is voluntary, the sector should exercise their discretion. If there’s a need for infrastructure in the communities where they have interests, by all means address those needs privately.
The procurement teams of mining companies already operating in our rural and regional communities have a much better grasp of value for money than government agencies based in Brisbane.
It is a classic smoke and mirrors trick and another sign of the very complicated relationship Treasurer Trad has with the mining sector.
Her electorate wants the industry shut down completely, but she knows just how much revenue it provides to the entire state – without which it cannot survive. But make no bones about it, that levy is a tax.