Article by Mackenzie Scott, courtesy of The Australian.
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The former Queensland Labor government set aside $2.5bn as a contingency for a predicted shrinking of the state’s share of GST, but squandered it on renewables and hydrogen projects.
Queensland found out last week its carve-out from the national $95.2bn GST pool would be reduced by $2.4bn this year because of increased revenues from the state’s mining industry, supercharged by Labor’s controversial super profits coal royalties regime, introduced in 2022.
The Australian can reveal former Queensland treasurer Cameron Dick set aside $2.5bn in April 2022 as a “buffer against adverse GST changes”, which was then invested and managed by the state-owned Queensland Investment Corporation as a long-term asset.
However, that money is no longer available to the new Liberal National Party government after the funds were allocated to Labor’s flagship renewable energy projects, including a $12.5bn green hydrogen project at Gladstone, which was scrapped by Treasurer David Janetzki last month.
Announcing the government’s plan to hit its 70 per cent renewable energy by 2032 target, then premier Annastacia Palaszczuk in September 2022 said the $2.5bn would be used to expand the Queensland Renewable Energy and Hydrogen Jobs Fund, which allowed taxpayer investment in commercial renewables projects.
One of the proposals was the now-cancelled Gladstone-based Central Queensland Hydrogen project, as well as a renewable energy demonstration plant at Kogan, and the Wambo and Tarong West wind farms.
Sources told The Australian that last year, between May and December, most of the $2.5bn was removed from QIC in two instalments of $1.3bn and nearly $1.2bn. The money was directed – via the QREHJF – to government-owned corporations including CS Energy, Stanwell and Energy Queensland for investment in renewables projects.
An additional $584m was generated from the initial investment and allocated in the last budget to reduce borrowing requirements.
Mr Janetzki said the money should have been allocated to frontline workers rather than spent on “speculative” renewables projects.
“The former state Labor government ripped out money from the Queensland budget that should have been set aside for nurses, teachers and police officers and handed it over to speculative hydrogen projects,” he said.
“The rainy day has come, but the money has been spent.
“They damaged investor confidence in the resource sector, negligently failed to save for a rainy day and now refuse to fight for Queensland’s fair share.”
Queensland will get a smaller cut of the GST pie next year after the independent Commonwealth Grants Commission recommended its share fall from 19.6 per cent to 17.4 per cent – a reduction of $1.19bn – largely due to higher coal royalties collected by the government. It followed a near $1bn drop from the previous year.
The CGC’s complicated formula examines a state or territory’s ability to generate income versus the diverse needs of the population against an average of its fiscal position over the previous three financial years.
A change in methodology this year also differentiated coal royalties based on the type that is mined, putting a higher weighting on the high-quality metallurgical – or steelmaking – coal produced in Queensland compared to “other quality” metallurgical and thermal coal dug up in other states.
Mr Dick first flagged the potential drop in GST in December 2021 in Queensland’s mid-year economic review after Treasury reported a “temporary” $8bn boost to revenues driven by a surge in the value of the state’s coal exports.
He said at the time the “fiscally responsible” investment would “buffer against adverse GST changes”.
“That means the funds and their returns will be available when we need them to support future government initiatives, particularly infrastructure investment,” Mr Dick said.
A caveat in the 2021-22 MYFER said the investment and its returns would “be available to be drawn down to fund future priority capital initiatives” to allow Queenslanders “to enjoy the benefits of our resources for years to come”.
Labor Treasury spokeswoman Shannon Fentiman said the party did what it had promised, while the Crisafulli government had yet to outline its fiscal policy or how it would bring down debt.
“We said this fund would be allocated to priority infrastructure projects when GST revenues were reduced in 2024 and we did exactly that,” Ms Fentiman said.
“If David Crisafulli and the LNP plan on cutting projects or sacking workers, they should be upfront and honest with Queenslanders.”
