PERTH (miningweekly.com) – The Queensland Resources Council (QRC) has warned that the 2.5% increase in gas royalties would likely be passed on to consumers, as Premier Annastacia Palaszczuk fended off calls to delay the royalty hike.

“It was a Labor government that set up the liquefied natural gas (LNG) industry in this state 10 years ago and we believe that the industry can pay a little bit more,” the Premier told Parliament according to The Australian.

“In relation to gas, we are reviewing our royalty regime. We will consult with industry and manufacturers on simplifying the system. This is the right thing to do.”

The state government in its Budget last week revealed a surprise hike in the petroleum royalty rake, taking it from 10% to 12.5% with the expectation of an additional A$476-million in revenues over the next four years.

QRC CEO Ian Macfarlane on Friday said that it was likely the cost of the tax hike would be passed on directly to consumers.

 “When you put up taxes someone has to pay, and in this case unfortunately that means that domestic gas users will have to reach further into their pockets,” Macfarlane said.

“Domestic industry and manufacturers have been struggling under the weight of higher gas bills, which can run into the millions of dollars already. An extra tax hit of more than A$13-million a year will make Queensland manufacturers less competitive and it will have a bigger flow-on effect for other Australian businesses that rely on Queensland gas.

“Up until now the government has been taking sensible measures to supply domestic industry with affordable and reliable gas, including through domestic gas only acreage releases.

 “A 25% gas royalty tax increase could prove to be self-inflicted economic damage.”

 The QRC has urged the Queensland government to exclude domestic gas from the royalty tax increase and to delay the introduction of any gas royalty increase until January 2020 to address confusion about the legislation.

 “We are also seeking a meeting with the Treasurer to discuss a longer term freeze on coal and mineral royalty taxes.

“Queensland’s reputation as a safe place to invest depends upon stable and transparent laws and regulations and a commitment to open and good faith consultation.”