Australia Institute says state government provided $1,947.1m to the project despite no public cost-benefit analysis and questions over environmental risk

This article is more than 5 years old

This article is more than 5 years old

Queensland taxpayers have subsidised the Abbot Point coal port expansion to the tune of almost $2bn with it expected to cost hundreds of millions of dollars more, according to a paper released by an independent policy thinktank.

While the environmental risks of the Abbot Point port expansion have been widely reported, the economic impacts have been overlooked, according to the Australia Institute.

The thinktank found Queensland taxpayers had contributed $1,947.1m to the project despite no public cost-benefit analysis of the project being done.

“The Queensland government money spent on Abbot Point comes at the expense of spending on other government services such as education and health. This fact has been emphasised by Queensland Treasury,” the paper, released on Friday, says.

“… No cost-benefit analysis or other economic assessment has been conducted, contrary to Queensland government guidelines and statements by treasurer Tim Nicholls. The dubious financial viability of Galilee Basin coal projects threatens the expansion of Abbot Point and the large sums spent by taxpayers.”

The Abbot Point port is in central Queensland, adjacent to the Great Barrier Reef. Ships accessing the port must pass through the reef and it is being upgraded to a capacity of 70m tonnes of coal a year. In the 2013-14 financial year 30m tonnes of coal passed through the port.

The port is owned by the Queensland government’s North Queensland Bulk Ports Corporation (NQBPC) and is funded by user fees and the state’s budget.

The taxpayer expenses for the port expansion include adding terminals to the port, upgrading infrastructure and development of the land being used.

The paper says that although there is an argument taxpayers will see their investment returned, it was not a sure thing.

“Mining investment is risky. Markets may change, companies may go bankrupt and projects may not proceed as expected. The returns to the state are uncertain and in the future, while the opportunity costs to the budget are certain and immediate, as are many wider environmental and social impacts of the projects,” it says.

The upgrade is in anticipation of the development of mines in the Galilee Basin and the paper comes as the federal court is being asked to overturn the environment minister, Greg Hunt’s approval of Indian company Adani’s $16.5bn coalmine in the Galilee Basin because he did not take into account the impact on the Great Barrier Reef of the greenhouse gases emitted when the coal is burned.

Queensland premier Campbell Newman and Adani say the mine will create 10,000 jobs and generate $22bn in royalties for the state although the source of the jobs claim has been questioned.

A plan to dump 5m tonnes of seabed sediment into the Great Barrier Reef marine park as part of the Abbot Point coal port development was ditched last year after a public outcry over the approval.

The Queensland opposition supports the project but has been critical of the taxpayer subsidies.

Newman declined to comment on the reported subsidies, saying “I don’t know where you get that figure from.”

He said the government was “in negotiations with Galilee basin coal proponents to provide infrastructure that will get the Galilee going and create over 20,000 jobs,” he said.

“There’s no secret here. We have no figure that’s been set yet, we’re in commercial negotiations and if we reach an agreement, we will tell the people of Queensland.

Asked where Indian media, who have reported that his government had proposed a $450m investment in Adani’s railway, had got this figure from, Newman replied: “I’m not going to comment on things I haven’t seen.”