The age of entitlement keeps getting bigger for mining corporations

Written by: on

by Max O.

A recent report by the Australia Institute on the mining industry shows that this sector has been the foremost beneficiary of state and federal government assistance.

Handouts to the mining corporations rank with government health and education budgets.

At least $17.6 billion worth of assistance to the mining industry was found by the Australia Institute when it examined the past six years of budgets from each of the states.

What royalties or rents the states receive from the miners, well over half of that money is given back via direct and indirect grants.

The Productivity Commission released figures last year which showed the mining sector received $492 million in direct subsidies from the Federal government in 2013. Although the Australia Institute argues that if tax concessions to the mining industry were included, the subsidy is actually ten times greater – $4.5 billion.

Mining corporations pay lowest tax
The Institute points out that the mining corporations have the lowest company tax rate because the industry has so many concessions. The average tax rate for companies is 21%, whereas the mining sector pays only 14%.

Why is this so, when one considers that our minerals are a finite and sovereign resource?

The conflict over royalties/rent between landowner states and corporate capital has been swayed by the World Bank's neo-liberal policy of the need for mineral rich countries to offer incentives to attract so-called high risk investment from mining companies.

The oft-mentioned risks for mining companies which are used to justify the need to offer attractive incentives for them to mine however slash the benefits that a country receives and in the long term set in motion hostility from the people who witness the pillage of their resources.

In fact their influence is so pervasive that most governments cower to their wishes.

Witness the media campaign orchestrated by the mining lobby and the capitulation by the federal ALP government which emasculated the Super Profit Mining Tax to a Minerals Resource Rent Tax to appease the rapacious greed of the mining giants.

In fact, Gina Rinehart receives more rent from her leases to the foreign owned mining corporations than any of the Australian governments receive. For example, the biggest mining states of Western Australia and Queensland, have paid out over six years $6.2 billion and $9.5 billion each in assistance.

Government subsidise corporations to repatriate their profits overseas
The Federal government increased the exploration and prospecting deductions by $220 million to $550 million on last year, while deductions for capital works expenditure rose by $127.5 million to $495 million. It also raised the fuel tax credits to the mining industry by $458 million, increasing the fuel subsidies to $2.45 billion.

“Despite a slight fall in commodity prices, the mining industry is still enjoying large profits and continues to grow... This type of industry assistance is usually used to help industries when they are financially vulnerable or establishing themselves. This is clearly not the case for the mining industry, whose pre-tax profits account for 6% of GDP,” argues the Australia Institute.

These handouts are even more galling when one considers that the mining industry is largely foreign (83%) owned. They are inefficient and inequitable subsidies that increase the profits for the mainly foreign wealthy owners of mining companies at the taxpayers’ expense.

Cutting out these handouts would help the federal government to fund the promised Gonski Education and Disability Care reforms, instead of this money being repatriated to overseas mining shareholders.

The only way out of this economic plunder is to break the control of the World Bank and mega-mining corporations have over our governments, followed up by reinstituting the Super Profit Mining Tax and the eventual nationalisation of all mining companies.

Print Version - new window Email article

-----