Subsidies for coal

This page is a summary of the Austalia Institute paper:

 Mining the age of entitlement

State government assistance to the minerals and fossil fuel sector -  Mick Peel, Roderick Campbell and Richard Denniss

 



2013-3 budget

Royalties Assitance
Qld             2,604           1,489
NSW             1,513              136
VIC                  48                36
              4,165           1,661

 

In the 

Over a six-year period, state governments in Australia spent $17.6 billion supporting the mineral and fossil fuel industries. Queensland’s assistance was by far the largest of all states, totalling $9.5 billion, followed by Western Australia’s at $6.2 billion.

 In 2013-14 Queensland is planning on spending $1.5 billion on industry assistance, almost 60 per cent of what it will receive in royalties.

This assistance takes many forms. Sometimes it is a direct cash payment. For example, the New South Wales government gave multinational coal companies $10 million in 2009 as an ‘assistance package’. Other times it comes in the form of discounted access to services provided by the state and its businesses – Queensland has provided the coal industry with ‘concessions’ on access to rail services worth over $1 billion between 2012-13 and 2013-14.

Often assistance comes in the form of infrastructure or projects that wholly or partly benefit the minerals and fossil fuel industries. Sometimes this expenditure brings a financial return, as in the case of Western Australia’s hundreds of millions of dollars spent on developing port infrastructure. Sometimes it doesn’t – the New South Wales government is unlikely to see any return on its $76 million expenditure on the Cobbora Coal project. (at Dunedoo)

At the federal level,  subsidies for the mining industry,  totaled $4.5 billion in 2013, up from $4.0 billion in 2012-3

 

We are in the coal business. If you want decent hospitals, schools and police on the beat we all need to understand that. Campbell Newman.

 

[Mining royalties] help to put teachers in classrooms, police officers on in our communities and nurses in our hospital wards; by doing their jobs, New South Wales miners are helping some of the most important people in our community to do theirs. NSW Minerals Council.

The vast bulk of coal transport expenditure and concessions came from Queensland – more than $7.6 billion – with some $333 million in New South Wales.
 

Royalties in NSW are a far smaller percentage of the state budget than Qld.

Victoria

If the full costs of assistance could be broken out from the $188 million budget of the Department of State Development, Business and Innovation’s Energy and Resources section, assistance would almost certainly be greater than royalties.

Coal royalties are charged on the basis of energy content, resulting in royalties of around $0.50 per tonne,

South Australia has very little coal.

http://www.marketforces.org.au/

Market forces have followed the money and come to similar conclusions.

Underestimate
These figures are only ever going to be a low estimate. Fossil fuel subsidies can be difficult to find in the tax system and its likely that some will have been overlooked. Direct grants from such as Carbon Capture and Storage Flagships – which uses public money to help the industry attempt to achieve “clean coal” also do not appear here. Nor do government-sponsored loans, such as the $250 loan guarantee provided in 2012 by the EFIC, Australia’s export credit agency.

 


Tax measure 2012/13 2013/14 2014/15 2015/16 2016/17
Fuel tax credit scheme (total)            5,519            5,871            5,906            6,270            6,360
Statutory effective life caps (accelerated depreciation)            1,555            1,720            1,795            1,780            1,705
Payments & free permits to most carbon intensive power stations            1,000                897                922            1,026            1,068
Concessional rate of excise levied on aviation fuel                970            1,010            1,280            1,340            1,400
FBT  – application of statutory formula to value car benefits                970                810                790                870                950
Exploration and prospecting deduction                550  –   –   –   – 
Carbon price mechanism thresholds for obligations                100                120  –   –   
FBT – exemption for employee taxi travel *                    5                    5                    5                    5                    5
FBT -exemption for employer-provided motor vehicle parking*                  55                  55                  55                  55                  55
GST – tourism; domestic air or sea travel*                  55                  55                  55                  55                  55
prrt – expenditure uplift rate*                  55                  55                  55                  55                  55
prrt – gas transfer price regulations*                  55                  55                  55                  55                  55
prrt – starting base and uplift rate for capital assets*                  55                  55                  55                  55                  55
Shipping – investment incentives*                  55                  55                  55                  55                  55
Deduction for petroleum exploration in designated frontier areas*                    5                    5                    5                    5                    5
Carbon price - uncovered sectors – decommissioned mines                  10                  20  –   –   – 
FBT – discounted valuation for car parking fringe benefits                  19                  21                  24                  26                  28
FBT – alternatives to the logbook for car expenses*                    5                    5                    5                    5                    5
FBT – exemption for minor private use of company motor vehicle*                    5                    5                    5                    5                    5
FBT – exemption for transport - oil rig & remote area employees                    5                    5                    5                    5                    5
Capex deduction for mining, quarrying and petroleum operations                    2                    2                    2                    2  – 
Total (including energy security fund payments)          10,926          10,826          11,074          11,669          11,866
Total (excluding energy security fund payments)          10,050            9,929          10,152          10,643          10,798
Source: http://www.marketforces.org.au/ffs/where-your-taxes-go/