ROYALTY INCREASE BAD FOR BUSINESS, CONSUMERS

The decision by the Andrews Labor Government to triple the royalties paid by the Victorian brown coal industry is wrong, inconsistent and will leave electricity consumers in Victoria – and possibly other states – worse off with higher bills.

The Victorian coal industry should not be slugged with this massive royalty rise without consultation and while the state enjoys a large surplus.

Linking royalties paid by Victorian coal companies to other states is short sighted and fails to understand that Victorian coal is not an export commodity as it is in both NSW and Queensland.

The Victorian brown coal industry is a vertically integrated sector where electricity suppliers extract brown for their own generation use.  There are no exports of brown coal and to equate the Victorian coal industry with that in NSW and Queensland is wrong where the majority of black coal production is exported.

There is no doubt that energy suppliers will be forced to increase costs to consumers in Victoria as a result of this decision. Claims that electricity producers have the capacity to absorb this royalty increase fail to understand the reality of the electricity market. 

With brown coal generation supplying twenty four per cent of the National Electricity market, it is expected that consumers in other states could be affected by price rises as a result of this massive royalty hike.

The expected increase in electricity costs will hit Victorian businesses hard, especially the manufacturing sector where uncertain economic conditions are already placing the industry under strain.

This decision has nothing to do with paying a fair share and everything to do with a revenue grab.

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