Spreading the benefits of the boom only so far

miningBudget speeches are always carefully scripted to try and influence how the media frames its coverage. This year the main message the government wanted conveyed was that it is spreading the benefits of the mining boom.

But as is so often the case, the budget papers belie the priorities outlined in the Treasurer’s speech. Beyond the feel-good sound bite, how accurate is it to describe the budget as spreading the benefits of the boom?

Despite record profits – $51 billion in 2009/10 – the mining industry receives substantial assistance from Australian taxpayers worth more than $4 billion per year.  The biggest concession is in the form of the Fuel Tax Credit Scheme which sees the mining industry pay no tax on diesel used for transport. In the lead-up to the budget there had been intense speculation that this subsidy would be removed, saving the government around $2 billion per year. This was not borne out in the budget papers, the government left it untouched. In fact, all $4 billion in subsidies to the mining industry were left untouched. Worse still, the budget papers show that the government has downgraded the revenue it expects to receive from the Minerals Resource Rent Tax by 20 per cent.

So while the Treasurer’s speech referred heavily to spreading the benefits of the boom, there is very little evidence to suggest that will be the case. Here’s a few other ways the $4 billion in subsidies that go to the mining industry each year could have been spent:

  • Increasing Newstart Allowance by $50/week = $1.2 billion per year
  • Denticare = $1.3 billion per year
  • Gonski education reforms = $1.5 billion per year.

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