How a new class of business baron is emerging with taxpayers providing the cash

Billions of dollars are being given to business with no understanding of how or why. The funds are creating a class of new business barons. John McCarthy reports.

May 27, 2024, updated May 27, 2024
The EQ Resources Mt Carbine pit (photo supplied)

The EQ Resources Mt Carbine pit (photo supplied)

It would appear we are at one of those moments in our history where massive change has started in our business sector. Where it goes from here and whether there is the political courage to continue backing it are the unanswered questions.

For decades Queensland’s economy has been based on mining, agriculture and tourism as well as financial services. It has served us well but it’s pretty narrowly-based and held captive to commodity prices and exchange rates while tourism also gets buffeted as soon as someone in China sneezes or a bird falls out of the sky.

But now newcomers are sprouting. They’re a new breed and there are deep pockets within governments to support them. It’s impossible to predict their path from here but they could be the Queensland’s new business barons.

It includes people like PsiQuantum’s Jeremy O’Brien and Peter Shadbolt or Alpha HPA’s Norm Seckold who are behind companies that could become giants in the Queensland corporate scene.

Both companies have benefitted from taxpayer largesse. In PsiQuantum’s case, it was $1 billion in grants, loans and share purchases.

Emerging green energy company Genex has also been a big beneficiary of State and Federal government funds and its $770 million Kidston pumped hydro project may not have gone ahead without it.

Government backing appears key to the new corporate era, but that isn’t a big departure for a state that has a history of meddling in the corporate scene. The difference is that it has become far more common with bigger and bigger taxpayer exposure and very little detail.

That’s not to say corporate welfare isn’t necessary. It is. We just know so little about the billions going into it. Governments routinely hide behind commercial confidentiality so they never have to report on the performance of these investments.

The creation and somewhat tortured existence of Suncorp is a prime example of the Government playing in the corporate field. Federally, it was car manufacturing industry which burnt through billions before collapsing.

But the state also funds smaller companies like EQ Resources, which received a $20 million debt package from the a QIC-controlled fund for its tungsten mine in north Queensland. Tungsten in a key mineral used in projects like wind farms.

The Government-owned QIC’s global investments in the energy transition is about $9.5 billion.

Less than a month ago, a handful of gas companies received $20 million in funds to help develop projects.

The revived Virgin received State Government funding allowing it to remain in Brisbane and has been a success. The Dalrymple Bay coal port is also backed by State Government capital and remains a sound company.

Yet no one votes for this. There are few policies spelled out in election campaigns, the taxpayer never sees and criteria for the funding, there are usually no quantifiable returns and very few benchmarks.

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Often the funding is in debt, which has to be repaid, but it’s not always the case. Sometimes it is in tax holidays, or equity.

Covid became an era of government spending to keep businesses alive. For example, Qantas famously received $2.7 billion during Covid in government subsidies, including $900 million in JobKeeper.

Ellume, which collapsed after it tried to forge a path in the US, also won unspecified Queensland Government funding.

The Government is also spending millions on the development of hydrogen, usually through its generator companies.

The Federal Government has set aside more than half a billion dollars to encourage production of batteries in Australia, a move likely to have impact in Queensland where several battery companies are emerging, including Li-S Energy which applauded the move.

The direction of these punts is clearly towards green technologies and for good reason.

Wood McKenzie estimated that the world would need $US400 billion invested into critical mining, refining and smelter capacity by 2035 and that 384 critical mineral mines would be needed to cope with the growth just in electric vehicles.

While Queensland has little to no lithium it is rich in others and the energy sector will be a huge economic driver for the state.

The emerging vanadium sector benefits from a $245 million Common User Facility in Townsville, backed by the State Government. Vanadium is used in grid-scale batteries and steel strengthening.

Its Partnership Program had reached $415 million in funding for projects.

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