Households will pocket $3 billion in power-price subsidies over the next four years, with the Queensland Government’s coffers flush with a windfall from coal royalties.
The extra cash from coal will significantly increase the $867 million operating surplus that was forecast for 2016-17, with the figures to be outlined in Treasurer Curtis Pitt’s Mid-Year Fiscal and Economic Review on Tuesday.
It comes amid warnings from the boss of Australia’s biggest mining company, BHP Billiton chief executive Andrew Mackenzie, that the recent spike in coal and iron ore prices may be fleeting.
The minority Labor administration recently announced plans to expand electricity rebates of about $330 a year to 157,000 households with a Commonwealth Health Care Card.
The Government ignored a recommendation by the Queensland Productivity Commission to offset the cost by taking rebates away from holders of the Seniors Card which is not means-tested.
The new rebate will cost $170 million over four years, taking the total direct subsidy for seniors, pensioners and other recipients to $860 million.
A further $2.2 billion will be spent subsidising power prices in regional Queensland to ensure they pay the same as residents in the southeast.
“I’m proud that, for the first time in Queensland’s history, low-income customers will be able to get the rebate,” she said.
The Government’s decision will expand rebates to 29,627 additional Brisbane homes, 17,740 Gold Coast residences and 7188 Townsville addresses.
Energy Minister Mark Bailey said Health Care Card holders could apply for the rebate from April 1 and the payments would be backdated to 2017.
Economists have predicted that the state’s balance sheet could be $1 billion better off because of increased coal prices.
The result would halve the Government’s $2 billion fiscal deficit, which includes the accounts of its struggling businesses, and please rating agencies that had Queensland’s AA+ credit rating under review.
Multibillion-dollar fiscal deficits have been forecast for the next three years as the profits from electricity networks — which have been lumbered with additional debt by Mr Pitt — dry up.
While the coal cash will be welcome news for an administration a year out from an election, Mr Mackenzie at the weekend warned it may not be a long-lasting lifeline for the economy.
“All of the signals we monitor tell us the iron of iron ore and coal prices of the past few months won’t last,” he said.
“Precisely when they will fall is not clear.”