World News – AU – Queensland Budget: Coal and Oil Projections Dubbed ‘Delusional’ As Royalty Fall

An expert questions the state government, which is heavily relying on coal and gas recovery after the global slump in fossil fuels hit 2020. 21 budget

Queensland’s coal and oil royalties revenues have collapsed to over $ 2 billion. USD – about half of the originally projected revenue – removed from the state budget result.

While the global slump in the fossil fuel industry has impacted the pandemic-delayed Queensland 2020-21 budget, the state is betting heavily on a coal and gas recovery in the coming years.

The budget predicts that the volume of coal and oil exports will recover and continue to grow. Energy market analysts say such an assumption is « delusional ». .

The budget – described by Treasurer Cameron Dick as « no surprise document » – is broadly in line with Labor’s electoral commitments before it was returned to the government in October. It comprises 500 million. USD that will be made available over a period of four years for the construction of publicly owned wind and solar projects.

The state will spend $ 8. 6 billion. operating deficit in this fiscal year, with total debt expected to be almost 130 billion over four years. USD will reach. Labor has identified the rise in debt and deficit as necessary to stimulate the economy during the pandemic and avoid austerity and service cuts.

One of the biggest budget hit was coal license fees. Last year Queensland made $ 3. 52 billion. from license fees from coal exporters. In 2020-21, that number will drop to $ 1. 64 billion. . The total exports will be around 18 million. Tons sink.

Similarly, oil royalties (including oil and gas) were originally forecast to be $ 600 million. USD. The budget now expects only 308 million US dollars.

The Treasury Department assumes that the price of coal – especially for thermal coal – will not recover significantly in the forecast period and that license fees will not return to the highs of recent years. However, the state forecasts that the volume of coal exports will reach the previous level in the next financial year and will continue to increase thereafter.

Tim Buckley, director of energy finance studies at the Institute of Energy and Financial Analysis, said the sharp drop in royalties was « strong evidence of the fossil fuel industry’s false promise to Queensland ». .

Queensland is the world’s largest producer of coking coal for making steel. Buckley said China’s steel production is at record highs and the pandemic has masked a bigger problem for the market.

Queensland Resources Council Chairman Ian Macfarlane said, “The natural resources sector shares the treasurer’s firm confidence that it will recover. ”

Environmental groups praised the government for meeting its renewable energy commitments, but said the state is lagging behind others, including New South Wales, in its green transition.

“The Queensland government had to announce an additional boost if we were to compete with the southern states in the race for 100% renewable energies. Right now we’re falling out of the pace, said Claire Fryer, the Queensland Conservation Council’s climate and energy campaigner.

The Queensland Council of Social Service also said the budget was a missed opportunity to invest in housing and social services.

« It is very disappointing that the state government has not made a new commitment to build new social housing, » said Qcoss CEO Aimee McVeigh.

“This government received a clear mandate to borrow significant amounts of money to recover from the Covid crisis. Whatever we borrow now should leave a lasting legacy to all Queenslanders. We shouldn’t borrow to rebuild, but to better rebuild. ”

In his budget address, Dick warned that the projected debt posed a risk that the state’s creditworthiness could be negatively assessed.

« But the priority for us is job creation, but I think as you saw out of budget today . . . We’re better than a lot of other jurisdictions in Australia and I think that will benefit us with our rating agencies.

« If the private sector is hit by a hammer blow like Covid, the government must help it get back on its feet. ”

Queensland, Government Budget, Cameron Dick, Annastacia Palaszczuk