The Queensland Resources Council and the NSW Minerals Council have slammed an anti-mining report by The Australia Institute (TAI), calling it a sham.
According to the NSW Minerals Council, the report entitled Mining in the Age of Entitlement published “blatant misinformation” and “significantly misrepresented the facts” in claiming that the mining industry receives $17.6 billion in government subsidies.
The QRC added that it “has been exposed as nothing more than a sham”.
In the report, released in June, TAI claimed that the mining industry received government assistance totalling $17.6 billion over a six year period.
It stated that Queensland has paid the largest subsidies to the mining industry in Australia, with $9.5 billion spent over the last six years.
Western Australia came in second with $6.2 billion over the last six years that was either paid directly to mining companies or spent on infrastructure used by mining companies.
The report shows that WA government allocated $1.4 billion to the industry in the 2013/14 budget, more than was allocated to the state police force which was allowed $1.3 billion.
Queensland has been identified in the report as planning to spend $1.5 billion on industry assistance in 2013/14, nearly 60 per cent of what it will receive in royalties.
The Australian Institute said this report was the first to put a dollar figure on the value of state assistance to the mining industry.
The report was dismissed at the time by QA premier Colin Barnett, who labelled it as “nonsense”.
The Association of Mining and Exploration Companies also dubbed the report “anti-mining”, with CEO Simon Bennison deriding the report and its authors.
“There’s just no credibility in the document whatsoever,” Bennison said.
“The details of a lot of these numbers aren’t industry assistance.”
Now an independent report by Castalia Strategic Advisors chief and the former head of the NSW Treasury, Michael Schur, has uncovered a number of financial errors in the report.
According to Schur the report “grossly exaggerates the level of subsidy to the mining and resources sector” and that the groups analysis of State and Territory budgets “was fundamentally flawed” with the actual government subsidies “amounting to no more than a few percentage point of the $17.6 billion claimed by the Institute”.
“The Australia Institute have been clearly caught attempting a massive economic fraud to attack the mining industry.”
Schur added that while exposing corporate fraud is important, The Australia’s Institute’s report on mining subsidies was incorrect.
He went on to explain the “claims were based on a flawed analytical framework, and in the main, unfounded”.
“Behaving commercially is mandatory for government-owned businesses – or public trading enterprises – it is embedded in the legal, policy and institutional frameworks by which they are governed,” Schur said.
“All their expenditure is by definition therefore commercial, and cannot be a subsidy to the mining and resources sector.
“Inexplicably, The Australia Institute claims that about $1 billion in Queensland passenger rail concessions are somehow a subsidy to the mining and resources sector and no logical reason is provided as to why this may be so,” he said.
"This should confirm once and for all that the Australia Institute is an anti-mining campaign organisation masquerading as a think tank,” NSW Minerals Council CEO, Stephen Galilee said.
"The revelation of this $17 billion fraud means that the economic credibility of the Australia Institute is now in tatters," he said.
“The Australia Institute should now apologise to the hard working miners of NSW and their families for campaigning against their jobs, and drop once and for all their attempts to put working people into unemployment.”
QRC head Michael Roche added that “it is no surprise the report was deeply flawed”.
“The bulk of the expenditure claimed as a subsidy, $10.3 billion, is associated with the commercial provision of rail, port, water and electricity services and infrastructure from which the government generates significant income,” he stated
“In addition, $3.7 billion in capital expenditure claimed as a ‘subsidy’ was spent by the government on items such as roads.
“The TAI incorrectly asserts that capital expenditure on road projects associated with the resources sector constitutes a subsidy. Roads are funded largely through general taxation and are available to all vehicles whether private or business.
“The remaining investments—comprising about 20 per cent or $3.6 billion—aren’t associated with the mining and resources sector at all and appear to have been incorrectly categorised.”
He went on to state that TAI’s report also contained a number of other factual errors including a barge landing at Aurukun – where there is currently no mine; that the capital cost of expanding the Meandu coal mine (which supplies the Tarong power station) is being recovered through electricity charges, when the government actually owns both the mine and the power stations; and that rail infrastructure concessions of around $1 billion between 2012 and 2014 were for mining, when in fact it was a budget subsidy for passenger transport and unprofitable regional freight services while the mining industry pays full commercial rates for track use and freight services.
Speaking to The Australia Institute they told Australian Mining that the responses from the various minerals councils have only raised more questions as to what are the actual subsidy figures.
"It's interesting that in all this they didn't actually provide any figures," TAI spokesperson Rod Campbell said.
"The question is how much money is actually given to the mining industry?"
He stated that TAI went through the governmental budget papers and went off the figures provided in these documents, saying the latest report has merely"recatergorised the figures we had, and part of the argument is really one of accounting – they say that as some figures are investments then these don't count towards the actual subsidy, but then in their papers they class future investments as supporting their regions".
"These mineral councils are always good in showing how much they pay, but are shy on how much they receive.
"We're just waiting for the real numbers."