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PERTH (miningweekly.com) – Recent data by the Productivity Commission has revealed that the Australian mining sector received negligible assistance from the federal government during 2015/16.
In its latest industry assistance review, the Productivity Commission notes that out of the A$15-billion in total industry assistance awarded to industry in 2015/16, the mining industry was the recipient of only some A$300-million, while the manufacturing industry received about A$6.2-billion in net assistance.
Industry assistance extends beyond government grants, and includes import tariffs, regulatory restrictions on competition, tax concessions, provisions of subsidised services by government agencies, government procurement preferences and guaranteed prices.
The Minerals Council of Australia (MCA) commented on Tuesday that the effective rate of combined assistance for the mining industry was just 0.2% in 2015/16, having fallen by half a percentage point since 2010/11.
The net tariff penalty on mining had increased since 2010/11 and 85% of the budgetary assistance attributed to mining consists of the R&D tax incentive, a measure applicable to all industries, MCA CEO Brendan Pearson pointed out.
“The Productivity Commission's finding is consistent with the message successive Australian governments have reiterated to their G20 partners: that Australia does not maintain fossil fuel subsidies,” Pearson said.
“The review shows that despite claims by the anti-mining lobby, the Fuel Tax Credit scheme, which refunds the tax paid on diesel fuel used off road, is not industry assistance or a subsidy.”
Pearson said that refunding the tax paid on diesel used in mining ensures that diesel, a critical input-cost, is not taxed, adding that all businesses and industries in Australia did not pay tax on diesel fuel consistent with the basic tax principle to not tax business inputs.
“Over recent years, the anti-mining lobby has sought to characterise the Fuel Tax Credit scheme as a subsidy for Australian mining. This is false and is confirmed by the Productivity Commission.
“The Fuel Tax Credit scheme ensures that businesses in the manufacturing, mining, farming, construction, irrigation and commercial fishing industries do not pay road tax on fuel used in off-road activities.”
Pearson said that without the scheme, tens of thousands of Australian jobs, especially in rural Australia, would be at risk.
“Any attempt to reduce the Fuel Tax Credit scheme would be vigorously opposed by the working families who rely on the scheme.”