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Ross Stitt notes Australia's public finances are addicted to mining. But the reliance creates huge vulnerabilities when the mining sector pays more tax than all other sectors combined

Economy / opinion
Ross Stitt notes Australia's public finances are addicted to mining. But the reliance creates huge vulnerabilities when the mining sector pays more tax than all other sectors combined
farm and quarry

Australia’s economy is sometimes referred to as a quarry with a farm on the side. That’s a description that’s been around for decades but it remains surprisingly true today.

Take the latest figures from the Australian Bureau of Statistics (ABS) for international trade in goods for September 2023.

A$ bln
Ores and minerals 16.0
Coal and other fuels 14.5
Metals 1.2
Agriculture 6.2
Machinery & other mfg 3.8

Mining and agricultural exports were ten times greater than manufacturing exports. Australia is an advanced, wealthy economy but it’s still heavily reliant on what it digs out of, or grows on, the ground.  

Services are also an important part of any modern economy. In Australia’s case export services are dominated by tourism and education.                      

The country’s heavy reliance on the mining sector exposes the country to the ups and downs of the world economy and of China in particular.

The most recent GDP figures from the ABS indicate that the Australian economy grew by just 0.2% in the September quarter. What growth there was, was driven by immigration and government expenditure. On a per capita basis, GDP declined by 0.5%, the second quarterly decline in a row.

Australia’s terms of trade fell 2.6% through a combination of falling export prices (-1.4%) and rising import prices (+1.2%). Coal and gas prices were down.      

The economic challenge of Australia’s dependence on mining was evident in this year’s IMD World Competitiveness Rankings. Out of the 64 countries surveyed, Australia placed first in ‘terms of trade’ (and second in ‘student inbound mobility’). However, it came a poor 58th in ‘economic complexity’ and a remarkably disappointing 62nd in ‘entrepreneurship’.

Australia remained in 19th place for overall competitiveness but from the perspective of the last two decades, the picture is more concerning. (New Zealand was 31st).    

Australia’s IMD World Competitiveness ranking

Source: Committee for Economic Development

In its analysis of the results, the Committee for Economic Development of Australia (CEDA) stressed Australia‘s need to diversify its economy. CEDA Chief Economist Cassandra Winzar said that ‘strong commodity prices and a healthy jobs market continue to drive Australia’s competitiveness, but we cannot keep relying on our traditional strengths’.

The danger is that the lucky country’s luck will run out.

Another notable feature in the IMD rankings was the unfavourable results for taxation. Australia was ranked 57th on ‘personal income tax’ and 56th on ‘company tax’.

An Executive Opinion Survey was carried out as part of the competitiveness ranking. Respondents had to select from 15 indicators what they viewed as ‘key attractiveness factors’. For Australia, far and away the lowest ranked indicator was ‘competitive tax regime’.   

Fortunately for Australia, its natural resources are so abundant that the mining sector flourishes despite the relatively unattractive tax regime. Just how fortunate is evident from the latest Corporate Tax Transparency Report released by the Australian Taxation Office (ATO) last month.

That report shows the amount of income tax paid in 2021-2022 by large companies. There were 2,713 companies that met the qualifying income threshold of $100 million and in total they paid $83.8 billion in income tax.

Incredibly, according to ATO Deputy Commissioner Rebecca Saint, ‘the mining sector paid more tax than all other sectors combined’. In other words, more than half of the income tax from the large corporate sector in Australia was paid by mining companies.

Thirteen companies paid $1 billion or more in tax. The list is revealing.

  Tax paid
(A$ bln)
BHP Group 9.5 Mining
Rio Tinto 9.1 Mining
Fortescue Metals 3.5 Mining
CBA 3.0 Banking
Westpac 2.2 Banking
BHP Iron Ore 1.9 Mining
NAB 1.6 Banking
ANZ 1.6 Banking
Mitsubishi Development 1.4 Predominantly mining
Roy Hill 1.4 Mining
Glencore Investment 1.3 Mining
Mitsui 1.1 Predominantly mining
Hancock Prospecting 1.1 Mining

Without the miners and the banks, the company tax revenues derived by the federal government would look very different.

Significantly, income tax is not the only ‘tax’ paid by the mining sector in Australia. Royalties are paid to state and territory governments on a range of mineral extractions. According to figures prepared by Ernst Young for the Minerals Council of Australia, mining royalties of $23.8 billion were paid in 2021-2022.  

The vast majority of these royalties went to three states – West Australia ($11.5 billion), Queensland ($7.8 billion), and New South Wales ($3.6 billion).

All up, in 2021-2022 the mining sector paid around $64 billion in company tax and royalties to governments in Australia. That’s a lot of new schools and hospitals, a lot of infrastructure and social welfare.

The abundance flowing from the mining sector goes a long away to explaining the strength of the Australian economy relative to that of New Zealand.

Of course, that abundance is dependent on the world continuing to want what Australia mines. The transition away from fossil fuels like coal and gas is clearly a threat. However, that transition is driving the demand for batteries which require lithium. Australia’s lithium exports went from nothing just a couple of years ago to $4.9 billion in 2021-2022. They are expected to leap again to a staggering $18.6 billion in the current financial year.    

There’s no sign of the lucky country’s luck running out just yet.

*Ross Stitt is a freelance writer with a PhD in political science. He is a New Zealander based in Sydney. His articles are part of our 'Understanding Australia' series.

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What could NZ achieve if we actually used our resources that are in the ground or seabed. We have the most amount off land percentage wise of any western country tied up in National parks (31 percent)  that cost money to maintain yet very few kiwis actually go and use them. Yet only .001 percent is used for mining. Yet the left want free schools free health care free this free that. And oh no my children have to go to Aussie to earn the big bucks to pay their student debt. And as the article above proves they are directly or in directly getting their big bucks from mining. Yet they will most probably still vote for the Greens or Labour here. 


Yes, yes, let's dig up our whole country and export it.  What could go wrong?


There's a bit of a difference between resource extraction in specific areas and turning the country into an opencast.

The alternative is even more immigration or higher taxes for the next half century.


Degrowth. The current economic system is destroying quality of life.


Depopulating countries look to have a diminished quality of life. This is partly because today's liabilities have almost half a century or more of funding in front of them.

So you'd have to depopulate, and either ask the young to harbour an even greater tax burden, or deny the current liabilities and remove any semblance of security people might have in the state.

It's sort of the personal equivalent of saying "bugger working", retire early and spending the rest of your life lamenting why you can't sustain yourself.


Its difficult/impossible to stop the treadmill. You say it so well.

Those who espouse degrowth and depopulation would have been 100 pct in favour of controlling the virus. The virus would have worked as intended by nature if allowed


I agree that the unwinding of financial expectations which are incompatible with energy, resource and ecosystem reality will be painful for some, but I am confident that the impact on society can be much more hopeful than the picture that you paint 


What I am trying to point out is the hypocrites who bemoan how our wages do not compare to Aussie and how our social services can't cope because of lack of staff yet want to be green. And how the younger generation protest climate change yet want to be dropped off at school in a SUV with the classrooms all nice and warm. We cannot compete with Australia end of unless we do dig up those resources so I wish the media would not say how bad NZ is every other day if we don't. That is the point I am trying to make


The National parks provide habitat / ecosystems for other living creatures. I know it's hard for humans to think beyond themselves, but I'm personally grateful there are still areas we (humans) haven't yet spoiled these areas in our quest for obtaining more 'money' at all costs.


Have you ever been to Waihi town. Suggest you do have a look at the mile deep open cast mine slap bang in the middle of town. You don't even know it's there. Do you realize that the greens 35 plus yrs ago tried to stop it because they said that the waste pond is going to cave in in a few yrs. This is 35 yrs ago. Most mines you don't even know they are there also you can bring regulation in were they restore it back to what it was. Should I bring up about DOC and dead snails. Also have you ever driven the west coast the native Bush that was felled a generation ago has regrowen it grows so quick down there. Also there is a coal mine there that the land has been returned back better than what was there before. Also .001 percent at the moment is under permit I hardly doubt if we went to .01 percent anyone will notice meanwhile you and a high percentage of kiwis are stuck in traffic bemoaning another Harbour bridge crossing or wanting better rail systems and infrastructure all that take money and burns CO2


The sort of drone that makes me depair of the human species.


Tell that to the Guyana people who have just discovered 11 billion barrels of oil the biggest find since the 70s guess what they are going to do with it not leave it in the ground that's for sure. Mean while little old NZ is going to save the world. Just think we are over due a super volcano eruption. Also that big Shiney thing in the sky will blow up one day and if those two things don't wipe us out we are over due a meteor hit which has wiped out many species that were longer on this earth than humans . Hopefully you feel sorry for them. 


Ain’t it the truth. When I lived in OZ Kate seventies/early/eighties I worked in mining for a while and discovered their reserves were mind blowing. What they produce annually is only a fraction of what they could if the markets allowed. They are so lucky in that respect that they do need to be efficient or anything really. The world will never run out of demand for metals. Thanks for the article. Very sobering risk for their politicians and policy makers but not a substantial risk really. Their coal and gas exports might dry up but as stated in the article these can be offset by extracting the metals that underpin the transition to electric engines everywhere. Plus their uranium reserves. Hardly touched. The drive to nuclear will help them as well. Lucky blighters indeed.


It’s big flat dry and mostly empty. Easy money. 


Should the benefits of the fruit of the earth not be distributed to wider society? Using mine revenue for public finances is fine, just make sure you have a Plan B for when it finishes.


We've all heard about the world running out of water, gold, silver, oil, you name it...amateurs have predicted it for decades.... but it hasn't happened and won't. 


You forgot phosphate for fertilizer, that will be interesting when it runs out one day!