At a time when the mining industry is earning record profits you might be surprised to learn that it is also receiving $4 billion worth of government subsidies and concessions each year. In a new paper commissioned by GetUp, The Australia Institute provides a breakdown of the amount of support the industry receives, which includes cheap fuel and tax breaks.
The $4 billion includes:
- $1,900 million in fuel subsidies
- $550 million in reduced tax payments for the gas industry’s production of condensate
- $368 million on tax write-offs for capital works
- $330 million on deductions for exploration and prospecting
- $312 million in accelerated depreciation write-offs.
Significantly, this is likely to be an underestimate as it does not include State subsidies (the Queensland Government alone is spending $1.4 billion each year in subsidies to the mining industry) or sweeteners like fringe benefits tax exemptions, benefits from publically-funded infrastrucuture projects or the assistance the mining industry will receive under the carbon tax legislation.
With the resources boom in full swing it appears counterintuitive that the government is subsidising the mining industry. Government subsidies are often used as a way of supporting important industries at times when they are financially vulnerable. This is clearly not the case for the mining industry.
In turn, there does not seem to be any reason why these subsidies are in the national interest. With the mining industry so profitable these subsidies are not supporting the industry, but instead are simply increasing the size of their profits and placing greater pressure on other industries such as manufacturing, tourism and education.
Put simply, these subsidies represent a transfer of funds from taxpayers to the owners of mining companies operating in Australia, most of which are foreign-owned.
To read Pouring fuel on the fire: The nature and extent of Federal Government subsidies to the mining industry, click here