Productivity Commission reaffirms that mining is not subsidised

Australian mining is the least government assisted sector relative to its size, according to the Productivity Commission’s Trade and Assistance Review 2019-20 released today.

The review estimates that the effective rate of assistance for mining – the ratio of total assistance to output – was just 0.2 per cent in 2019-20, the same low rate as the last five years.

The report shows that in 2019-20, Australian mining incurred a net tariff penalty of $53 million.

The Commission points out that given that Australia’s mining industries are export-orientated price takers, this has an adverse impact on the competitiveness of Australia’s mining exports.

The Commission also notes that budgetary assistance to mining has fallen by 18 per cent since 2014-15.

Sixty-five per cent of budgetary assistance attributed to mining consists of R&D tax incentive offsets, which are available to all industries.

The Commission confirms that while foreign direct investment (FDI) in mining has declined in recent years, the industry still accounts for more than a third (35.1 per cent) of all FDI in Australia.

The Commission’s decision to monitor FDI in future reviews will improve understanding of changes in investment patterns, including the impact of major changes to Australia’s foreign investment policy settings implemented this year.

Policy settings that help make Australia a competitive destination for investment are vital to the Australian mining sector and jobs and regional communities mining supports.

Mining is Australia’s largest industry, generating $271 billion in export revenue in 2020, directly providing 256,000 highly skilled, highly paid and secure jobs, and paying $39.3 billion in taxes and royalties in 2019-20 alone.

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