Mr JOHN PRICE: My question without notice is directed to the Minister for Mineral Resources. What is the latest information on coalmine royalties in New South Wales?
Mr KERRY HICKEY: I thank the honourable member for Maitland for his continued interest in the coal industry. In 1997 the Federal Treasurer, Peter Costello, instructed the Productivity Commission to carry out an inquiry into the Australian black coal industry. One of the specific matters on which the commission was asked to report was coal royalties. On 11 February 1999 Senator Nick Minchin, then Minister for Industry, Science and Resources, released the commission's final report, which states:
In NSW … ad valorem royalties would allow royalty levels to move with world coal prices, better reflect the value of coal resources, and encourage the economic exploitation of low grade coals.
If that is not clear enough, the recommendation is spelt out in a big box on page 293 so that nobody—not even the Opposition spokesman—could miss it. It states:
The NSW Government should adopt an ad valorem royalty system.
The Federal Government warmly welcomed the report and its findings. In fact, Senator Minchin put out a media release that very day, which stated:
The Federal Government supports all the Commission's recommendations, and intends to work with the New South Wales and Queensland State Governments to ensure their implementation.
But in a press release dated 6 April 2004 the Opposition spokesman accused the Government of being greedy in moving to an ad valorem system. Once again the State Opposition opposes its mates in Canberra. The Federal Government laid the cards on the table seven years ago when the Treasurer instructed the Productivity Commission to look at coal royalties. Five years ago Senator Minchin strongly urged the State Government to implement its recommendation that New South Wales adopt an ad valorem system. This year the Commonwealth Grants Commission looked at our mining revenue, resulting in this State losing $87.6 million in grants each year. The Opposition spokesperson thinks the State is being greedy, even though his mates in Canberra are penalising us. He should get on the bus to Canberra that was referred to earlier.
Mr SPEAKER: Order! I call the honourable member for Coffs Harbour to order for the second time.
Mr KERRY HICKEY: I welcome the chance to advise him of a few pertinent facts. Since 1981—23 years ago—New South Wales coal royalties have been calculated at a flat rate of $1.70 per tonne, or $2.20 per tonne for open-cut mines. In the 2002-03 financial year coal royalties totalled $206.6 million. That represents 0.69 per cent of total State revenues of $29.9 billion. Even if the new scheme raises an extra $150 million in its first year, as some have predicted, coal royalties will contribute 1.06 per cent of the projected total revenues in 2004-05. So the people of New South Wales stand to get back 1 per cent from the sale of the coal resources they own. Let us put that into context. One company recently increased its hard coking coal contract prices for 2004-05 by 200 per cent, with thermal coal contract prices increasing by 68 per cent. These figures are for term contracts and clearly reflect the positive outlook for the industry. The stock market could climb even higher than this.
But what sets the ad valorem system apart is that it takes into account the lean times. The honourable member for Upper Hunter is interested in this. He would understand that the flat rate of $1.70 per tonne is payable whether the coal earns $10 a tonne or $100 a tonne. It is a pity that the honourable member cannot get that through to the brain of the Opposition spokesman. The flat rate is completely inflexible and does not reflect the nature of the industry. Following a meeting with the New South Wales Minerals Council and coal industry representatives on 19 April 2004, the Director-General of the Department of Mineral Resources invited the coal industry to comment on the new system and the proposed draft allowable deductions.
We are replacing this rigid, unfair system with one that follows the bust and boom nature of international coal markets—a system that the Federal Treasurer instructed the Productivity Commission to review, a system that the commission recommended, a system that the Federal Government backed, a system that will save the people of New South Wales $87.6 million. These facts have either escaped the attention of members opposite or are just another example of their sheer hypocrisy.
Questions without notice concluded.