MAC: Mines and Communities

Australian miners received $18b assistance over six years

Published by MAC on 2014-06-25
Source: Sydney Morning Herald,

The report 'Mining the Age of Entitlement' mentioned below can be downloaded at:

Mining, energy sectors received $18b assistance over six years

Gareth Hutchens

Sydney Morning Herald

24 June 2014

State governments have spent nearly $18 billion supporting mining and energy companies over the past six years, The Australia Institute says.

The research body has published a new paper called Mining the Age of Entitlement: State Government Assistance to the Minerals and Fossil Fuel Sector.

This is the first time anyone has attempted to put a dollar figure on the value of state government assistance to fossil fuel and mining companies across the country.

It shows the bulk of such assistance - via subsidies, concessions and cheap access to infrastructure - has occurred in Queensland and Western Australia.

Foreign Minister Julie Bishop warned last week that Australia would lead international talks in November on reducing ''inefficient'' subsidies to the global oil industry, saying fossil fuel subsidies were distorting energy markets and encouraging ''wasteful consumption''.

The institute's paper, to be published on Tuesday, shows that since 2008-09, the Queensland government has provided more than $9.5 billion in direct support to mining and energy companies, while the Western Australia government has provided more than $6.2 billion.

NSW has supported mineral and energy companies by providing more than $872 million. It is followed by the Northern Territory ($406 million), South Australia ($316 million), Victoria ($205 million) and Tasmania ($54 million).

The financial assistance has taken many forms, including cash payments, discounted access to services provided by states, or new infrastructure projects that wholly or partly benefit those industries.

The report is based on an analysis of state government budget papers that are produced by state treasuries each year.

It also shows the value of royalties that will be paid this year by fossil fuel and mining companies and compares this with how much state government assistance those companies will receive.

The Queensland government, for instance, has budgeted $1.5 billion for industry assistance for 2013-14, but that is worth almost 60 per cent of the $2.6 billion it expects to get in royalties.

The paper says state governments' assistance to these industries reduces their capacity to spend on other areas such as provision of health, education and transport infrastructure.

However, the Minerals Council of Australia said the mining industry contributed much to the economy in the form of revenue.

''Australia Institute reports about the mining sector are routinely riddled with errors, distortions and misstatements,'' Minerals Council chief executive Brendan Pearson said.

''According to Deloitte Access Economics, over the last six years, the Australian mining sector contributed over $121 billion to federal and state governments in the form of corporate tax and royalty payments.''

Australia Institute executive director Richard Denniss said his paper was not meant to present an argument for or against government assistance to these industries; however, it should highlight that these industries were beneficiaries of government assistance too, just like other industries.

Profitable Aussie miners get billions in state subsidies: report

Jeffrey Richmond

24 June 2014

Australia's mining sector has received massive state subsidies despite its striking profitability, according to a report an Australian think tank issued this week.

The Australian Institute says in the report that more than half of mining royalties paid to some states is returned to mining companies.

The institute's analysis of the last six budgets of each state and territory concluded that at least A$17.6 billion (about US$16 billion) worth of assistance has been doled out to the sector.

The subsidies are both direct, as in tax exemptions and infrastructure supply, and indirect, such as through the provision of cheap services, according to the institute's executive director Richard Denniss.

The biggest handout, $9.5 billion, went to mining state Queensland. The state of Western Australia received the second-largest amount of $6 billion.

"The Queensland Government has spent about as much money (in the current fiscal year) supporting its mining industry as it's spent on building new hospitals," the Australian Broadcasting Corporation quoted Denniss as saying.

He said Western Australia spent as much to bolster its mining as it did to support its police force.

"So these are enormous sums of money," he said.

Beth Mohle, secretary of the Queensland Nurses Union, called the government's priorities "all wrong" and said that as a result the healthcare system has suffered.

"It's not to say that there isn't a need for some form of subsidies, but really, surely the priorities must be in terms of essential service provision and not in largesse to big business," she said, according to ABC.

But the Australian Institute's Denniss questioned the need to subsidise mining.

"Of all the industries that states should want to use subsidies to attract, the mining industry would be last," he said.

"The thing that attracts the mining industry to a state is the quality and the quantity of the mineral resources," he said. "They can't threaten to take their mines elsewhere."

The report has provoked a heated reaction from mining industry representatives.

Brendan Pearson, chief executive of top mining lobby Minerals Council of Australia, rejects the findings, citing independent analysis by the Commonwealth Government's Productivity Commission.

"It has found, year after year, that the mining industry receives no subsidies," he said, insisting that the sector spends more on infrastructure and building towns than any other.

The Queensland Resources Council lambasted the Australia Institute report, describing it as a document that "would embarrass the North Korean government."

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