A new report commissioned by the Construction, Forestry, Mining and Energy union (CFMEU) has found the share of the industry income paid in wages has dropped, while mining company profits have surged over the past 20 years.
The union says record mining industry profits have outstripped growth in taxes and royalties. CFMEU mining division general secretary Andrew Vickers says the economic benefits of the resources boom have been highly concentrated and he added, 'Australia as a country and Australians generally haven't benefitted from the mining boom, the unprecedented mining boom we've seen over the last 10 years. The alarming thing is just how well companies have done out of it. What tax they have paid compared to what they sprout about themselves paying,' he said.
The CFMEU has also called for the mining tax to be changed and not repealed. The union also wants a Norwegian style sovereign wealth fund to be set up to invest the proceeds of the mining boom.
But the Minerals Council of Australia says that the mining industry spent $35 billion on local contractors, services and supplies in the 2011-12 year, and paid $21 billion in taxes and royalties. Additionally, Australia's oil and gas workers are reported to be the world's most highly paid, earning large six-figure salaries. Not to mention dividends paid to shareholders and superannuation funds, as well as capital gains on shares in our big miners, with virtually every person with a super account benefiting. Most of the largest super funds are forced to hold shares in our large miners including BHP Billiton (ASX: BHP), Rio Tinto (ASX: RIO) and Fortescue Metals Group (ASX: FMG).
Part of the issue the Australian economy is facing is that higher wages and falling productivity have made Australia uncompetitive. This will need to change otherwise we could see resource projects head offshore. We have we have already seen the effects of that play out in the car industry in Australia.
Foolish takeaway
The truth of whether the mining boom has benefitted Australia or not probably lies in between the views of the CFMEU and the Minerals Council. Australia was certainly protected to a large extent from the issues of the GFC thanks to record exports of commodities and at a time of record prices.
