Rejecting mine expansion could push power prices up by 12%

THE rejection of a major coal mine expansion in New South Wales by the state government being celebrated by environmental advocates, could increase power prices by up to 12% - so was it refused for the right reasons?

If it went ahead, Coalpac's Cullen Valley expansion would have pumped $1.3 billion into the state economy and created 120 full-time jobs.

Allegations published in metropolitan media suggest a key advisor to Planning Minister Brad Hazzard owned property near where Coalpac planned to expand.

The Australian reports Mr Hazzard's chief of staff owned 42ha of land overlooking the site, a fact never declared when the company met with the minister and the staff member.

NSW Resources Minister Chris Hartcher tells APN the decisions "are made independently of government, including assessments by the Department of Planning".

The government received 817 submissions objecting to mining near the Ben Bullen State Forest.

Beyond the cloudy claims marking conflicts of interest, the dumping of the Coalpac project - which subsequently left the company in voluntary administration - marks another hit to its reputation as an investment destination.

NSW's restrictive policies on gas and coal, driven by powerful public opposition, sits in contrast with the Queensland government's pro-development stance.

Earlier this year, NSW installed buffer zones around residential areas in response to community pressure.

Companies are now reluctant to invest while legislation remains fluid, putting NSW at risk of a gas crisis by 2016.

Gas giant Santos, which has billions in development in Queensland is waiting for NSW to install a process allowing "immediate development" of its gas supplies.

"We are moving towards this position but are not there yet," a spokesman said.

Queensland Treasurer Tim Nicholls said the state had cut 440 pieces of regulation, while winning unprecedented investment in the past year.

Mr Nicholls said Queensland will likely have the fastest growing state economy by 2014-15.

Mr Hartcher said NSW was still working on investment in its resources sector, but it would have to happen alongside its protective regulations.

"Global interest in Australian resources is strong enough for all states to benefit," he said.