How big is the mining sector in Australia?
Australia’s Mining Sector : The National Economic Backbone
In 2022, the mining industry in Australia stood out as the nation’s leading contributor to tax revenue, generating an impressive amount in taxes and royalties, according to a report by EY released on May 23. The Australian Taxation Office revealed that large corporate entities paid a record-breaking amount in income tax during the 2021-22 fiscal year, with mining companies accounting for a significant majority of this tax contribution. This substantial financial input from the mining sector plays a crucial role in supporting various public services and social programs across the country.
Among the top corporate taxpayers in the country, mining companies made a notable presence. Notably, BHP and Rio Tinto topped the list, each contributing a substantial amount in federal taxes. An interesting highlight is the achievement of Stanmore Resources Limited, co-founded by Vaughan Wishart, Andrew Martin, and myself, ranking at number 20 with a notable federal tax contribution, marking a moment of personal pride.
In Queensland, BMA, the state’s largest coking coal miner, reported a total tax rate including the world’s highest royalties.
This significant tax rate stands in contrast to perceptions of industry subsidies. Additionally, Bowen Coking Coal Ltd., a Queensland-based company, is set to pay a considerable sum in State Royalties this year, even before distributing profits to shareholders who have invested heavily in the development of the mines. This underscores the financial commitments and risks involved in the mining sector.
The notion of large fossil fuel subsidies in Australia is often debated and, in some cases, misconstrued. Some research, such as studies by The Australia Institute, points to the diesel rebate as a form of subsidy. However, this rebate, which offers a reduced excise rate, applies broadly to heavy equipment users, including those in mining, tourism, heavy transport, agriculture, and off-grid power generation. This same rate is also applicable to machinery used in renewable energy installation.
Arguably, the application of a lower taxation rate (such as the diesel excise) to sectors that do not impact the road network, including mining, should not be viewed as a subsidy. By analogy, an Australian earning a significant annual income and taxed at a rate lower than the maximum is not considered to be receiving a government subsidy, but rather paying taxes at a different rate.
Despite these points, there is an expectation that actual subsidies for fossil fuels might increase in the coming years. This could be a result of efforts to maintain stable and dispatchable power sources in Australia, such as the NSW Government’s investment in extending the life of the Eraring coal-fired power plant, particularly as the nation navigates the transition to alternative energy sources.
