The Queensland government's increase of coal royalties is akin to shooting an elite athlete in the foot, BHP Billiton chairman Jac Nasser says.
Tuesday's Queensland budget increased coal mining royalties in a move predicted to generate $1.6 billion over four years.
Royalties will jump from 10 to 12.5 per cent for every tonne of coal sold for between $100 and $150.
Coal sold for more than that price will attract a 15 per cent royalty, thus targeting more profitable miners such as BHP.
Mr Nasser on Wednesday said it made no sense for Queensland to increase taxes on coal miners that were losing money on current coal prices.
The royalty hike was "like shooting an elite athlete in the left foot", he told a business lunch in Melbourne.
"Why would you want to consider handicapping it (the coal industry)?," Mr Nasser said.
"Why would you think it is going to continue to behave as if it's a boom time.
"No change in taxation policy in Australia is a good thing.
"Every time there's a change it seems to be to the detriment of industry."
Mr Nasser said the current downturn in the global economy should serve as wake-up call to government and industry.
However China's growth has substance and BHP - the world's biggest miner - would continue to plan for the long term, he said.
Mr Nasser said that as an Australian was he was in support of investment in Australia, but only if the conditions were right.
Government policy and tax regimes need to provide long term certainty, he said.