Mining subsidies over $4.5b: Australia Institute

Federal government subsidies to the mining sector has risen by half a billion dollars over the past year, according to the Australia Institute.

The Productivity Commission figures from earlier this month showed the mining industry got direct subsidies of $492 million last year.

But senior economist at the left-leaning think tank Australia Institute Matt Grudnoff said total subsidy is almost ten times that amount when tax concessions given to mining companies are included.

“The mining industry has the lowest rate of corporate tax because it has so many tax concessions,” he said.

“The average is about 21 per cent, the mining industry only pays 14 per cent. While we have a big debate about the car industry and how much subsidies we give those, they’re only getting about half a billion dollars a year whereas the mining industry gets four and a half billion dollars a year.”

Even this is a cautious estimate, Grudnoff believes.

"The Federal Government is helping to pay for a lot of rail and port infrastructure that the mining industry uses," he said.

"So it's certainly an underestimate of how much they actually receive."

Exploration and prospecting deductions rose by $220 million from last year and deductions for capital works expenditure increased by $127.5 million.

The Queensland government recently provided $30 million in new exploration funding in the State Budget to assist the Geological Survey of Queensland in exploring for new mineral deposits across the state over the next three years.

Queensland Resources Council chairman Geoff Dickie welcomed the funding and the fact that the government is consulting with the industry to see how it wants to allocate the money.

Crude oil condensate tax subsidies declined by $550 million after the Federal Government moved this tax to the petroleum resources rent tax.

But Grudnoff said this decline was offset by an increase in fuel tax credits to the industry of $458 million.

But, as the ABC reports, the mining industry has rejected the costs, saying they distort the extent of government support.

Minerals Council spokesman Ben Mitchell said fuel concessions should not be deemed a subsidy.

“It’s not a subsidy because it’s a business input, in the same way that a carpenter’s drills might be a business input,” he said.

“The fuel tax was imposed to build public roads. Mining builds its own roads and that’s why we get a credit on that.”

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