Mining taxes and royalties remain strong pillar for Australian economy
In FY 2018-2019, Australian miners paid $39.3 billion in taxes and royalties to the country’s federal and state governments.
The mining industry has sent just short of $230 billion to federal and state governments over 11 years – enough money to pay for 8,850 schools or 320 hospitals.
In the most recent financial year FY 2018-19, taxes and royalties set a new record of $39.3 billion, up $8 billion on the preceding year, reflecting higher production, strong gains in export volumes for bulk commodities and strong prices across mineral commodities.
Royalties and company taxes paid between 2008 and 2019 totalled $229.84 billion.
These are the headline figures from a new Deloitte Access Economics report commissioned by the Minerals Council of Australia (MCA).
MCA chief executive Tania Constable said high and consistent payments across the commodity cycle shows that the mineral sector is a reliable and significant tax and royalty contributor.
“The report confirms that the minerals sector does the heavy lifting on company tax collections, contributing close to 30% of all company tax in 2018-19,” she added.
“These tax and royalty payments again demonstrate how the minerals sector had underpinned Australia’s prosperity for decades.”
Iron ore helped last year’s record tax/royalty take
The growth in taxes and royalties paid by miners has been generally strong over 11 financial years, reflecting the explosion of mine development and expansion kick-started by the commodity super-cycle.
There were dips in 2012-13 and 2014-15 reflecting weaker commodity prices in those years, but the trend has been positive overall.
The Deloitte reports shows that in 2008-09, miners paid $7.471 billion in royalties and $13.205 billion in company tax – a total of $20.676 billion.
In 2018-19 the respective amounts were $14.067 billion and $25.269 billion, making a total of $39.335 billion.
Deloitte partly attributes the strong earnings last financial year to the climbing iron ore price in the first half of 2019 on the back of strong Chinese demand and the reduced global supply following Vale’s tailings dam tragedy in Brazil.
(Where mining companies also have oil and gas operations, the payments relating to those profits have not been included in Deloitte’s calculations.)
Mining paying ‘its fair share’
The MCA said the Deloitte report follows the recent release of the Productivity Commission’s trade and assistance review for 2018-19 which stated that tariff and budgetary assistance to mining is “disproportionately low”.
The rate of total assistance to output was just 0.2% in 2018-19, the same low as in the previous three years.
Ms Constable said Deloitte’s data revealed “that the minerals sector reports its contributions regularly and transparently to show Australians that the industry can be trusted to pay its fair share of tax and royalties”.
MCA claims that lower taxes, faster project approvals, modern skills and flexible workplaces would help the minerals sector make an even bigger contribution to both the national economy and regional jobs as Australia emerges from COVID-19.