Coal delivered Queensland its largest ever Budget surplus – even during Chinese trade boycotts

The Greens may want to phase out coal by 2030, but for one Labor government, this commodity has contributed to Australia’s largest-ever budget surplus.

Queensland Treasurer Cameron Dick on Tuesday announced a record budget of $12.3 billion for 2022-23.

In his budget speech, he mentioned “coal” 20 times, noting that coal royalties had helped pay for transportation infrastructure and aid to the poor.

The words ‘renewable’ and ‘clean’ were also mentioned, but only three times each.

“We can deliver our state’s largest cost-of-living program, our state’s largest construction program, and lower debt for one simple reason: progressive coal royalties,” Dick said Tuesday.

“This is the largest budget surplus ever recorded by a state or territory government.”

Queensland’s budget surplus is even larger than Western Australia’s revised $4.2 billion uranium surplus for the same fiscal year, despite the Sunshine State partially funding $550 in electricity rebates for each household.

While WA relies on China’s demand for its steel production, Queensland’s generosity continued even as China boycotted Australian exports, including coal.

But new trade data released on Wednesday showed a big surge in demand for Australian exports from Japan, Korea and India – three major buyers of Queensland coal.

China will remain Australia’s largest trading partner in 2022, but aggregate demand for Australian exports fell by two percent to $184.721 billion, the Australian Bureau of Statistics revealed.

This happened as Japan’s demand for Australian exports rose 84 percent to $119.733 billion.

South Korea’s export demand rose 42 percent to $53.875 billion, while India’s demand rose 42 percent to $34.847 billion.

A report from the Queensland Treasury in November 2022 noted that China’s ban on Australian coal, imposed in October 2020, was outweighed by demand from other Asian countries.

Just a year after that ban, 90 percent of Queensland’s coal exports otherwise destined for China were offset by increased exports to other countries, including India, Japan and Korea.

In his budget speech, Mr. Dick noted that Queensland has a green energy future, but the words ‘renewable’ and ‘clean’ were only mentioned three times each.

Ironically, coal royalties were credited with financing the transition to renewable energy.

“Speaker, because of those coal royalties and the surplus they’ve generated, this budget delivers what the people of Queensland need: the transformation of our energy system to clean, renewable energy,” he said.

The Greens, who claim to champion the needs of the poor, want coal phased out by 2030.

‘Phasing out all coal and gas and transition to 100% renewable energy by 2030’, it says.

Greens leader Adam Bandt campaigned last year to phase out exports of thermal coal used for electricity generation with an export cap from 2023, so that the ‘maximum allowable’ level of exports would drop from 230 million tonnes to zero within seven years.

Queensland is the world’s largest overseas exporter of metallurgical coal used to make steel, but it is also a major exporter of thermal coal.

Prime Minister Anthony Albanese and Labor campaigned last year for a net zero target for 2050 and received support from the Greens within government for a 43% reduction in carbon emissions by 2030.

While Labor differs from the Greens in some areas, the federal government needs its support in the Senate to get legislation passed if the coalition blocks it.

Without coal royalties, Queensland would be more dependent on the distribution of the Commonwealth’s goods and services tax revenue which is distributed among the states and territories.

Governments would either need to borrow more or possibly rely on GST rising from its current 10 percent level, hurting the poor more.