Productivity Commission finds sector aid ‘disproportionately small’

According to Mining News Pro - In the commission’s Trade and Assistance Review 2018-19, it estimates that the mining sector only received $335.5 million, or 4.3 per cent of the total $12.1 billion government assistance in the fiscal year.

By comparison, the primary production sector, which comprises mostly of agriculture, received $1.7 billion in assistance, equating to 21 per cent of the total assistance.

The manufacturing sector also received $2.5 billion in the net combined assistance, or 30 per cent of the aggregate, against a contribution of 6 per cent to the economy.

Three-quarter of budgetary assistance attributed to mining consisted of research and development tax incentive offsets, which are available to all industries.

The Productivity Commission estimated that the effective rate of assistance for mining – the ratio of total assistance to output – was just 0.2 per cent in 2018-19, the same low rate for the last three years.

The commission also noted that budgetary assistance to mining and manufacturing sectors had declined by nearly 30 per cent over the past six years.

Meanwhile, assistance to the agriculture and services sectors has grown by 17 per cent and 15 per cent, respectively.

Minerals Council of Australia chief executive officer, Tania Constable said the report repudiated the claim that Australian mining was subsidised.

“The mining industry underpins Australia’s economic prosperity, pays its fair share of tax and royalties with annual contributions of $31 billion and provides more than 240,000 highly skilled highly paid jobs, which contribute to strong and sustainable regional communities. The industry is also providing much-needed export revenue,” she said.

The report shows that in 2018-19, Australian mining incurred a net tariff penalty of $55 million because of tariffs imposed on imported inputs into mining production.

The net tariff assistance across all sectors in 2018-19 was $265 million.

The report did not take into account the Australian Government’s support for industries impacted by coronavirus. The Productivity Commission chair, Michael Brennan said that the measures were “part of an economic stimulus to mitigate the supply and demand shocks posed by the pandemic.”

The Productivity Commission is the Australian Government’s independent research and advisory body on a range of economic, social and environmental issues that affect the welfare of Australians. Its role is to help governments make better policies in the long-term interest of the community.