Mining the age of entitlement

State government assistance to the mining and fossil fuel sector
by Mick Peel, Rod Campbell and Richard Denniss

State governments are more usually associated with the provision of health, education and law enforcement than industry assistance. So it might surprise taxpayers to learn that state government assistance for the mineral and fossil fuel industries consumes significant amounts of their money.

Each state provides millions of dollars’ worth of assistance to mining industries every year, with the big mining states of Queensland and Western Australia routinely spending over one billion dollars in assistance.

This paper is the first attempt to put a dollar figure on the value of state assistance to the mining industry. It shows that over a six-year period, state governments in Australia spent $17.6 billion supporting the mineral and fossil fuel industries. Queensland’s assistance was by far the largest of all states, totalling $9.5 billion, followed by Western Australia’s at $6.2 billion.

State government assistance to the mineral and fossil fuel industries appears substantial even when compared to big budget items, such as health, education and law and order. For example, Queensland’s expenditure on these industries in 2013-14 is similar to the amount to be spent on disability services and capital expenditure on hospitals. Queensland will spend as much on supporting the mining industry as it does on supporting some of its most vulnerable citizens. Similarly, industry assistance in Western Australia is substantial when compared to police and health, and in New South Wales, it is comparable to other important budget items such as managing the state’s national parks and providing accommodation for those with disabilities.

Supporters of Australia’s mineral and fossil fuel industries are quick to argue that royalties paid to state governments demonstrate those industries’ value and importance. Rarely, however, are these contributions compared with industry assistance. State expenditure on industry assistance makes up a significant proportion of what states receive through royalties, particularly in the big mining states of Queensland and Western Australia. In 2013- 14 Queensland is planning on spending $1.5 billion on industry assistance, almost 60 per cent of what it will receive in royalties.

Mining the state budgets for details on state subsidies to the mineral and fossil fuels industy was a lengthy process. It is not surprising, then, that the scale of state subsidies to some of Australia’s biggest, most profitable industries has thus far remained unearthed. This paper details the value of state revenue that would otherwise have been available for increased vital public services – for example, more teachers, nurses and police.

Full report

Letter to Minerals Council