New federal resources minister Madeleine King has welcomed the surge in profits being reaped by coal and gas producers, with new government data showing earnings more than doubled in the last financial year.
According to the latest forecasts published by the Department of Industry, Science and Resources, earnings for coal producers topped $100 billion for the 2021-22 financial year, while LNG exporters earned an estimated $70 billion – both figures are more than double the respective profits earned in the 2020-21 year.
Global fossil fuel prices have surged higher due to the flow-on effects of the Russian invasion of Ukraine, with King highlighting that the conflict is “driving continued strong demand for Australian resources and energy”.
King was appointed to the federal resources portfolio after the election of the Albanese government and comes to the role with a significant history of outspoken support for the fossil fuel industry.
In a statement on Monday, King appeared to welcome the higher earnings flowing to the fossil fuel producers, despite recognising that domestic energy users are being slugged with higher costs.
“Strong global demand for Australia’s energy, coupled with flooding and weather events at home, contributed to the recent surge in domestic gas and coal prices,” King’s statement says.
“Australia’s resources and energy sector continues to underpin Australia’s economy and to support international energy security during the global turbulence caused largely by Russia’s invasion of Ukraine,” King adds.
“The Australian Government is committed to ensuring that the benefits of Australia’s exports flow through to all Australians, as well as the 303,000 Australians who work directly in the resources sector.”
But, King does not go as far as suggesting the Albanese government could levy a new ‘windfall profits’ tax on coal and gas producers, which could ensure the excess profits contribute to the Australian economy.
UNSW professor Jeremy Moss said the substantial windfall profits being collected by the coal and gas companies should serve as a prompt for higher taxes to be imposed on resources profits.
“Australian taxpayers will reap much less than they should from this massive windfall from the sky-rocketing price of coal, as coal exporters in general pay very little corporate tax on their earnings,” Moss said.
“On top of that they are getting away with massively adding to carbon dioxide emissions without paying for the cost of the added greenhouse burden and impact.”
“At the very least, the Albanese government should find a way to impose a windfall tax on coal and other fossil fuel exporters who are not paying their way for the massive profits they are reaping,” Moss added.
The statement is remarkably similar to the statements produced by King’s predecessor as resources minister, Keith Pitt.
In March, Pitt welcomed the spike in coal and gas prices in the immediate wake of the Russian invasion of Ukraine, with the conflict plunging European energy markets into a supply crisis.
The pain of high fossil fuel prices has been felt by local consumers too.
A spike in global oil prices have flowed through to record-high petrol prices, while high coal and gas prices have contributed to an electricity market crisis that has led to the collapse of several electricity retailers and has hit consumers with higher costs.
Perhaps as a reflection of the changed position of the new Albanese government, King highlighted that demand for the resources used in the production of electric vehicles and batteries are also experiencing strong increases in demand.
“Commodities such as lithium, nickel and copper, which are critical to the transitioning cleaner energy sources of energy, have also achieved record high prices. Combined export earnings of lithium, nickel and copper are estimated to have reached about $23 billion in 2021–22, an increase of 39 per cent from 2020–21,” King’s statement says.
“Lithium demand is being driven by surging global electric vehicle sales, which doubled to 6.6 million in 2021. Lithium export earnings are estimated to have reached $4.1 billion in 2021–22, and are forecast to more than double to $9.4 billion in 2023–24.”
