Miners flex their $74bn revenue muscles

Article by Geoff Chambers, courtesy of The Australian

Miners have poured a record $74bn into the coffers of federal, state and territory governments, with the Albanese government pocketing $42.5bn in company tax revenue, and Queensland and NSW cashing in on booming coal royalties.

After Jim Chalmers announced a second budget surplus anchored by strong mining exports and commodity prices, an EY royalty and company tax payments report, released on Monday, reveals miners have paid governments almost $360bn in taxes and royalties over a decade.

With Peter Dutton promising a Coalition government will adopt a “pro-mining mindset” and the Greens demanding an end to coal and gas, Anthony Albanese is under pressure to balance Labor’s emissions reduction ambitions with support for traditional mining.

Commissioned by the Minerals Council of Australia, whose members include BHP, Rio Tinto, Lynas Rare Earths, Glencore and Peabody, the annual report shows a $9.3bn increase in payments to governments. The $74bn payday for governments in 2022-23 included a decade-high $31.5bn in royalties. As well as traditional mining revenue associated with iron ore and coal, The Australian this month revealed oil and gas companies are on track to pay a record $17.1bn in taxes and royalties across 2023-24.

With the mining industry paying the highest average wages, contributing the most company taxes and delivering the bulk of export revenue, MCA chief executive Tania Constable warned against holding back miners with “draconian 1970s industrial relations agendas, high energy, environmental, planning and taxation costs”. The MCA will launch a national advertising blitz on Monday.

“The recent federal budget revealed that government spending is on the rise and it is our country’s mining sector that foots the bill, paying more than half of the company tax paid by large corporations and international businesses,” Ms Constable told The Australian.

“Despite underwriting our nation’s prosperity, living standards and security, the path forward for the mining industry remains uncertain. Our tax system is increasingly uncompetitive, and our regulatory environment is becoming more cumbersome.

“Approvals are taking too long, tied up in endless red tape, well-funded lawfare and multi-layered government bureaucracy, wasting taxpayers’ money and holding back Australia’s economy from realising its full potential.”

Queensland’s share of national royalty payments increased from 32.5 to 47.2 per cent off the back of higher coal royalty rates, with NSW claiming a $4.7bn royalties windfall. In the battleground election state of Western Australia, iron ore remained the biggest earner despite lower revenue and prices in 2022-23.

“Total mineral sector royalties reached approximately $31.5bn in 2022-23, increasing by $7.6bn from the previous year. The yearly growth in royalties was primarily due to an increase of $7.1bn in royalty taxes paid in Queensland due to the introduction of progressive coal royalty rates,” the EY report said.

“Western Australia’s royalty income is largely attributed to iron ore. In 2022- 23, iron ore production volumes were similar to 2021-22, so changes in WA’s royalties were largely driven by changes in iron ore prices.

“Iron ore prices declined in the second quarter of 2022-23 and remained lower in early 2023 due to production restrictions in China.”

With mining companies and associated supply chains supporting 1.1 million jobs, Ms Constable said the sector was helping keep “Australia solvent”.

“A robust mining sector is critical if we want to sustain public spending, advance Australia’s broader economic agenda, and keep the budget in the black,” she said. “This is revenue that supports families, builds communities, and funds essential services like the NDIS, childcare subsidies and aged care.”

The mining industry has warned the Prime Minister that at a time of “decaying productivity and looming long-term structural fiscal deficits, the government is imposing regressive policies on the sector that dampen the investment growth critical to achieving economic potential”.

Less than a year out from the election, Mr Albanese and Mr Dutton will ramp up campaigning in the resources-rich jurisdictions of WA and Queensland and the Northern Territory.

While Mr Albanese has used his Future Made in Australia policy to support critical minerals, Mr Dutton promised in his budget reply to cut red tape and rollback Labor’s sweeping IR reforms.

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