PERTH (miningweekly.com) – An Australian think tank has defended the nation’s fossil fuel industry against reports that the sector was benefiting from protectionism, stating that no fossil fuel subsidies existed in Australia.

In a report ‘The Fossil Fuel Subsidy Myth’, the Institute of Public Affairs argued that Australian fossil fuel subsidies were a myth and that no protection was given to the mining industry.

“Over the last six years, the phrase ‘fossil fuel subsidy' has been used by environmental campaigners to demonise the mining industry and question the economic viability of Australia's coal, oil and gas companies," said Institute of Public Affairs Energy and Innovation director and report author Brett Hogan.

“A critical examination reveals that so-called fossil fuel subsidies are usually refunds for excess taxes paid or legitimate deductions for business inputs that are not restricted to mining companies.”

Hogan said energy subsidies, like all subsidies, distort the natural flow of investment, demand and supply in markets, and should not be supported.

“While there are many governments around the world that intervene to unfairly benefit fossil fuel products or companies, Australia's is not one of them. The campaign by environmentalists against mining and fossil fuel companies is politically motivated and pays no regard to the contribution these companies make to taxation, export income, employment, or to basic human needs such as electricity and food.”

Hogan noted that, if the product was legal and the company was legal, then that company had the right to trade, employ people, pay its bills and claim legitimate business expenses.

"The tax system exists to raise enough revenue to pay the government's bills – it should not be used to pursue political vendettas,” said Hogan.

The study pointed to data from the Australian Taxation Office, which showed that mining companies paid some A$13.6-billion net income tax between 2012 and 2013, along with A$16.6-billion in franked dividends and A$25.8-billion in wages during the same time.

The value of export earnings from the resources and energy sector was recently estimated at A$174-billion in 2014/15, with the mining sector employing some 229 156 people.