Jobs growth in Queensland's fast-growing mining communities will be protected in this morning's mini-economic statement by Queensland Treasurer Andrew Fraser, but mining royalties will slump dramatically.
Queensland's economic growth figure for 2008-09, predicted to be 4.25pc in the State Budget in June, is also tipped to slow to about 2.75pc, while unemployment will rise from 3.75pc to 4.25pc, according to Mr Fraser.
On the weekend, Mr Fraser announced savings cuts of $200 million - above the $300 million he had already identified - over the next four years.
Queensland Resources Council chief executive officer Michael Roche said he tipped mining royalties to fall to $2 billion, well below the $3.6 billion predicted for 2008-09 by the State Government in the June Budget.
"The State Government has budgeted for a very large increase in royalties," Mr Roche said.
"The June Budget was $3.6 billion in royalties, up from $1.4 billion, which was an extraordinary lift in one year," he said.
Mr Roche predicted mine royalties to fall dramatically over the next 18 months.
"It could well be closer to $2 billion, or even lower," Mr Roche said.
"You don't have to go back too far when royalties bought in a grand sum of half a billion dollars, so $1.4 billion last year seemed like a big number."
Mr Roche said the variability in relying on Queensland's mining royalties for infrastructure growth in their $37 billion State Budget was obvious.
"The message for government is always to be very careful about locking in recurrent spending programs against surges in (mining) royalty income," he said.
Mr Roche said the government did predict in their forward estimates a scaling back of revenue from mine royalty, but he said the predicted change was unforseen.
"But I suspect what we will see tomorrow is a very sharp downward revision of certainly the 09-10 numbers," he said.
Mr Fraser flagged the serious decline in royalties in State Parliament last week and said he would take the budget into deficit to continue economic growth.
"This necessitates a Budget deficit and likely in the year after also," Mr Fraser told Parliament last week.
Mr Fraser has already announced $25 million of a $100 million regional Queensland stimulus will go towards housing construction to keep the economic engine room of the Queensland economy from going into deficit.
This move has the backing of the Queensland Resources Council.
However, Mr Roche said key mining industry projects must be kept on the front foot.
One key project is the $920 million, 69 kilometre rail link between the North Goonyella and Newlands rail systems in the northern Bowen Basin coalfields.
This rail link, known as the "Northern Missing Link", connects the mines of North Goonyella and Newlands and allows coal trains from Central Queensland to get to the port of Abbot Point, near Bowen.
"A lot of the rail projects are integral to the capital program of the State Government," Mr Roche said.
"The Northern Missing Link project, the continued upgrade of the Goonyella coal chain and the rolling stock programs for new rolling stock -we really need those programs to continue so we don't find ourselves in the position we were in just a year ago of shortfalls of infrastructure'" he said.
"We need to be planning right now for the next upturn, given the lead times.
"So don't take the pedal off those programs."
He warned a decision to scale back those programs would have a longer-term impact on the local and state economy.
"That is the infrastructure that will be needed in 2010 when the market is turning back in our favour."
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