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PERTH (miningweekly.com) – The resources industry on Tuesday lashed out at research body The Australia Institute (TAI), slamming its latest report on the mining sector as “bogus”.
In an economic analysis, TAI claimed that state governments had invested some A$17.6-billion to assist the resources sector over the past six years, with Queensland taking some A$9.5-billion of that pie, followed by Western Australia at A$6.2-billion.
The assistance took many forms, the research body pointed out, from assistance packages to discounted access to services or infrastructure.
“State government assistance to the mineral and fossil fuel industries appears substantial even when compared to big budget items, such as health, education and law and order. For example, Queensland’s expenditure on these industries in 2013/14 is similar to the amount to be spent on disability services and capital expenditure on hospitals,” TAI said this week.
It noted that similarly, industry assistance in Western Australia was substantial when compared to police and health, and in New South Wales, it was comparable to other important budget items such as managing the state’s national parks and providing accommodation for those with disabilities.
“Supporters of Australia’s mineral and fossil fuel industries are quick to argue that royalties paid to state governments demonstrate those industries’ value and importance. Rarely, however, are these contributions compared with industry assistance,” the researcher said.
TAI pointed out that state expenditure on industry assistance made up a significant proportion of what state governments receive through royalties, particularly in Queensland and Western Australia.
In 2013/14, Queensland was planning on spending A$1.5-billion on industry assistance, almost 60% of what it would receive in royalties.
“TAI has produced some howlers in the past but today’s effort takes the cake,” Queensland Resources Council CEO Michael Roche said on Tuesday.
“The report details all manner of state government business expenditure but completely ignores the other side of the balance sheet.”
Roche said that while almost every capital project undertaken by government-owned businesses for resources sector power supply and distribution, water, rail and port capacity received a headline, the report studiously and fraudulently avoided acknowledgement that these projects were executed on a fully commercial basis, with resources companies entering into commercial contracts that underwrote the capital expenditure and provided commercial returns to government-owned businesses.
“Not only were these projects undertaken at no cost or risk to taxpayers but their commercial returns were served up as government-owned business dividends in successive state budgets.”
Roche noted that the TAI was correct in reporting the current state budget forecasts that royalties of worth some A$15-billion would be collected from the Queensland resources sector over the next four years, but added that was only part of the equation.
“Last financial year, resources sector companies spent almost A$38-billion in Queensland on wages, goods and services and communities. That direct spending injection is calculated to have generated total spending of A$76-billion – one-quarter of the state’s economy.”
The Western Australian Chamber of Minerals and Energy (CME) said that the TAI report ignored facts, rather pursuing an anti-resource headline.
“This is a flimsy report and the Australia Institute have clearly let their ideology get in the road of the facts,” CME deputy chief Nicole Roocke said.
She pointed out that in Western Australia, more than 22% of the state government’s revenue was sourced from mining royalties, with royalty income forecast to account for over 25% of the state government’s revenue in 2017/18.
“Reliance on income from the resources sector has never been greater, with an expected contribution of $7.3-billion, in 2014/15,” said Roocke.
The Association of Mining and Exploration Companies (Amec) has also lashed out at the report, saying it was an attack on the mining industry.
“The report ignores the billions of dollars already paid by the industry to the federal government and to the respective state and territory governments as a return to the Australian community for the extraction of a non-renewable resource, not to mention a myriad of other state- and territory-based taxes, fees, charges and levies,” said Amec CEO Simon Bennison.
“The report lacks credibility and overlooks the fact that the resources sector is providing the future economic growth in the Australian economy, especially in rural and regional communities,” said Bennison.