Activist groups warn that swathes of farmland are at risk since the holiday would cover the Galilee basin and two other undeveloped mining regions

The Adani Carmichael project will reportedly receive a reduced royalty “holiday” offer from the Queensland government under a policy that activists say would subsidise other vast new coal projects that imperil swathes of farmland.

The state treasurer, Curtis Pitt, declined on Friday to confirm a report by the Australian that the Palaszczuk government had settled on a plan to give Adani a pause in royalties for up to six years.

But Pitt said the premier, Annastacia Palaszczuk, had made it plain she wanted an offer “wrapped up by Monday” when the cabinet will vote on a policy hashed out by the pair with the deputy premier, Jackie Trad.

Trad’s left faction in cabinet forced a revision to an earlier reported proposal that Adani pay $2m a year in royalties on its coal in the mine’s early years, giving the miner a loan of up to $320m.

It is not clear how different the new offer is – the Australian reports that Adani would be asked to pay “several” million dollars a year before repaying, as before, the balance of full royalties with interest.

Trad had previously said a royalties “holiday” would break Labor’s promise at the last election not to subsidise Adani’s bid to build Australia’s largest coalmine in the Galilee basin.

But the reported royalties “holiday” will now apply across the Galilee basin and two other undeveloped mining regions, the Surat basin and the North West Minerals province.

The big mining prospect in the Surat, Glencore’s Wandoan proposal, would mine 22m tonnes of coal a year – more than the first phase of Adani’s Carmichael mine.

The prospect of widespread royalty “holidays” has alarmed Lock The Gate Alliance, an anti-mining group backed by farmers, which says it is a “recipe for disaster for food production”, putting 110,000 hectares of farmland at risk on the Western Downs.

The Wandoan mine alone would have an impact on up to 32,000 hectares, the Lock The Gate spokeswoman Ellie Smith said.

“The Queensland government should not be easing the path for polluting coal projects that will damage our land and water, and destroy rural communities,” she said.

“Instead of propping up the damaging coal industry with special deals, the government should be investing in growth industries, such as agriculture, renewable energy, aged care and tertiary education, in order to create long-term jobs in regional communities.”

Smith said another beneficiary of a royalty holiday was New Hope Coal, who “claim to be sitting on a resource of 1bn tonnes of coal in the Western Downs”.

The Queensland Greens senator Larissa Waters said state Labor had been “publicly shamed” for its previous royalty plan for Adani but had “cooked up another deal that hands out taxpayer-funded favours to all mining companies”.

The board of Adani Mining’s Indian parent company had been due to make a “final investment decision” on Monday but postponed this after the internal Labor revolt killed off the previous offer.

This decision was to be the trigger for the Indian parent injecting between $100m and $400m for preliminary works on the mine this year.

But the $16bn project will not be clinched until it secures financial close with banks – Adani’s current deadline is in early 2018.

Pro-renewable energy analysts say Carmichael is at risk of becoming a “stranded asset” but Pitt says the project “has the backing of the Queensland government”.

“It’s very clear we have an enormous opportunity to assist regional Queensland at a time when I think it really does need the support to get as much investment traction and bringing forward of investment into some of these resources projects,” he said.

Pitt said incentives to develop the North West Minerals province were important because “some of the minerals that will be extracted will be those that will help and assist sustainable energy going forward”.

“Renewable energy including battery storage will rely on some of the things that will come out of the ground,” he said.

“So this is not a story about long-run approaches to resources, this is a story about making sure we have an eye to the future and transition to a renewable economy.”

Stuart Palmer, of Australian Ethical, a $2bn investment fund, said a royalty holiday for Adani and other new coal mines was “desperate, myopic politics”.

“It’s yet another subsidy for the Carmichael mine which is uneconomic without taxpayer support. It’s completely inconsistent with Australia’s commitment to limit warming to two degrees under the Paris Agreement. It ignores the economic, environmental and social costs to Australia.

“Australian governments aren’t responding to declining smoker numbers by lowering tobacco taxes to grow Australian tobacco sector jobs. Why then the handouts for Adani Carmichael?”