The Productivity Commission says Australia is not sufferring 'dutch disease' and the benefits of the mining industry outweigh the negative impacts on other sectors.
Fairfax Media reports Commission chariman Gary Banks said the increased wealth brought by mining had seen a rising demand for goods and services.
Banks said while mining had added 134,000 jobs since 2004-05 services had added 1.6 billion positions.
According to Fairfax Media Banks said it was strength in mining and services that was hurting the manufacturing sector but the advantage of these gains was "undeniable".
"Despite high foreign ownership around one half of the income growth through mining is estimated to be flowing into the Australian economy," he said.
Economic think-tank The Australia Institute has previously argued the mining industry could be blamed for the future destruction of 15,000 manufacturing jobs across Australia.