Thursday, 08 November 2012 16:56
Queensland Premier Campbell Newman, attending a business forum in Brisbane, has received a lesson in "conservative economics 101" over his government's decision to raise mining royalties.
Since the start of October, royalties increased from 10 per cent to 12.5 per cent for every tonne of coal sold at between $100 and $150 a tonne.
Coal sold for more than that price attracts a 15 per cent royalty.
In front of 200 business leaders at an Australian and Deutsche Bank Business Leaders Forum lunch on Thursday, Australian Institute of Company Directors Queensland president Keith DeLacy told Mr Newman the royalty increase "could not have come at a worse time".
Business confidence was down, costs were rising, commodity prices were falling and the Australian dollar was still high when the decision was announced in the September budget, the former Labor state treasurer said.
"I shouldn't have to tell you this, but conservative economics 101 says you don't always get more revenue by increasing taxes, particularly on the productive sector," he told Mr Newman.
"Largely, and very often, you'll just get less production."
Mr Newman said he accepted the criticism but was confident the decision would benefit the state in the long term.
He said he had also given the industry security by agreeing not to increase royalties for 10 years.
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