Mining the Age of Entitlement?
The Australia Institute (‘the Institute’) in its report “Mining the Age of Entitlement” makes the claim that the Australian mining and resources sector in Australia has received subsidies from State & Territory Governments totalling $17.6 billion over a six-year period, and that those subsidies rival the expenditure by those State & Territory Governments on health care and education.
The Institute further claims that royalties paid to State & Territory Governments by the mining and resources sector are only slightly greater than these subsidies, implying that the sector makes a minimal net contribution to economic activity. Finally, the Institute claims that the value of these subsidies would otherwise have been available for increased vital public services—for example, expenditure on teachers, nurses and police.
The timing of the Institute's report coincides with a heightened national narrative about the need to end the age of entitlement, as framed by the recent Federal Budget. While it is difficult to disagree with the general sentiment that Australia cannot sustainably prop up unproductive sectors of the economy, it is impossible to agree with the conclusions of the Institute’s report that the mining and resources sector has been a significant beneficiary of government largesse. This is because the Institute’s claims are based on an analysis of State and Territory Budgets that reveals a fundamentally flawed understanding of public sector accounting, public infrastructure funding and financing, and the inter-relationship between the public trading enterprise and general government sectors.