Tuesday, April 26, 2016

Victorian Coal royalties increase in State Budget


Original article published at Climate Action Moreland

The Andrews Government will increase coal royalties in the 2015/16 budget to approximately match the rate levied in New South Wales, Queensland and Western Australia. This should be welcomed.

The rate will increase three fold from January 1st 2017 and is estimated to raise $252 million over the forward estimates over the next 4 years.

This will prove useful for helping to fund the health support for the LaTrobe Valley, as well as health and education expenditure for the state. $51.2 million was promised in the state budget to implement the recommendations of the Mine Fire Inquiry and improving health outcomes for the Valley.


Victorian Treasurer Tim Pallas said, "We are ensuring Victorians get a fair return for the use of our state’s natural resources.”

The royalty is paid for access, use and extraction of a resource the mine operator manages on behalf of the community. In other words, it is payment to the public for the profits made in extracting and burning our coal.

According to Pallas, the royalty rate has not increased for over a decade, "This will simply bring Victoria into line with the other states.” he said.

The rate charged per gigajoule of energy will rise from 7.6 cents to 22.8 cents. This compares to New South Wales which charges 25.2 cents, and Queensland, which charges 21.5 cents.

Tim Pallas warned that Electricity generators are expected to absorb this cost as part of their margins. He argued that the royalty increase, which will contribute about $70 million a year on average, should not affect electricity prices.

"Power companies can easily absorb this change, and there is no reason for it to be passed onto consumers. The Government will brief the Essential Services Commission accordingly.” said Pallas.

According to the Australian Energy Market Commission, Victoria has the cheapest household electricity prices in Australia.

"Last year it [Hazelwood] ended up with $291 million a year in revenue, so certainly our view is that the increase wouldn’t have a significant impact on the operating costs of the coal mine or the electricity generators," Pallas told The Age.

Electricity Operators, as part of the implementation of the 2014 mine fire Inquiry, will have their rehabilitation bonds also increased in a phased rise, while a permanent and independent mechanism for evaluating end-of-life mine rehabilitation costs is currently being worked on.

At last it seems the inherent massive government subsidies to the companies responsible for mining brown coal are being wound back.

Two weeks ago health proffesionals urged the Andrews Government to prescribe LaTrobe Valley coal closure for our health and a safe climate.

A report prepared by Harvard academics for Environment Victoria in April 2015 estimated the annual health costs of coal-fired power for Victoria at $831.5 million and the annual social carbon costs at $2.882 billion, according to The Age: The hidden cost of the Hazelwood coal power plant.




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