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Mining booms and government budgets

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  • Freebairn, John

Abstract

The different time paths of effects of a mining boom driven by an increase in demand or by an outward shift of supply on the revenues and expenditures of the Australian Commonwealth and State Governments are described using a partial equilibrium model. Theoretical arguments to replace the present system of royalties with one of the different forms of economic rent tax and to increase the average revenue collected are presented. Some of the practical challenges to achieve more efficient special taxation of mineral and energy resources are reviewed. In the Australian context, it is argued that the case for placing the windfall revenue gains of a mining boom into a sovereign wealth fund rather than the normal budget processes is not compelling.

Suggested Citation

  • Freebairn, John, 2012. "Mining booms and government budgets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(2), pages 1-21.
    • Handle: RePEc:ags:aareaj:208897
    DOI: 10.22004/ag.econ.208897
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    References listed on IDEAS

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    1. John Freebairn & John Quiggin, 2010. "Special Taxation of the Mining Industry," Economic Papers, The Economic Society of Australia, vol. 29(4), pages 384-396, December.
    2. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    3. Henry Ergas & Mark Harrison & Jonathan Pincus, 2010. "Some Economics of Mining Taxation," Economic Papers, The Economic Society of Australia, vol. 29(4), pages 369-383, December.
    4. Ellis Connolly & David Orsmond, 2011. "The Mining Industry: From Bust to Boom," RBA Annual Conference Volume (Discontinued), in: Hugo Gerard & Jonathan Kearns (ed.),The Australian Economy in the 2000s, Reserve Bank of Australia.
    5. Ross Garnaut, 2010. "Principles and Practice of Resource Rent Taxation," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(4), pages 347-356, December.
    6. Renée A Fry & Warwick J McKibbin & Justin O'Brien (ed.), 2011. "Sovereign Wealth:The Role of State Capital in the New Financial Order," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number p658, January.
    7. Ellis Connolly & David Orsmond, 2011. "The Mining Industry: From Bust to Boom," RBA Research Discussion Papers rdp2011-08, Reserve Bank of Australia.
    8. Jason C. Hart, 2010. "Dutch Disease and the Sustainable Management of Royalty Wealth in Western Australia," Economic Papers, The Economic Society of Australia, vol. 29(4), pages 421-431, December.
    9. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
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    Cited by:

    1. Drew, Joseph & Dollery, Brian Edward & Blackwell, Boyd Dirk, 2018. "A square deal? Mining costs, mining royalties and local government in New South Wales, Australia," Resources Policy, Elsevier, vol. 55(C), pages 113-122.
    2. Rod Tyers, 2014. "Asymmetry in Boom-Bust Shocks: Australian Performance with Oligopoly," CAMA Working Papers 2014-50, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    3. Valle de Souza, Simone & Dollery, Brian & Blackwell, Boyd, 2018. "An empirical analysis of mining costs and mining royalties in Queensland local government," Energy Economics, Elsevier, vol. 74(C), pages 656-662.
    4. repec:ags:aare16:235308 is not listed on IDEAS

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