On January 12, 2025, Adept Economics Director Gene Tunny joined Luke Grant on 2GB Sydney to discuss the critical role of Australia’s mining industry in funding public services and addressing national challenges. The conversation highlighted the economic contributions of mining, the challenges posed by decarbonisation efforts, and the broader implications for energy policy and government budgets. You can listen to the conversation via this link:
Why our schools and hospitals depend on mining – Weekends with Luke Grant – Omny.fm
Luke invited Gene onto his show after reading Gene’s op-ed in the Daily Telegraph on 10 January:
Mining industry foes would leave us with fewer roads, hospitals and schools | Daily Telegraph
The op-ed is also published on the CIS website.
Gene underscored that mining royalties for coal, oil, and gas, estimated to contribute over $38 billion over the next four years (2024-25 to 2027-28), are vital to funding essential public services. Including WA iron ore royalties and royalties for non-fossil fuel minerals, the contribution increases to around $74 billion. These revenues could construct dozens of hospitals and schools annually, emphasising their role in supporting community well-being. Gene noted that governments would face significant challenges in meeting public expectations for health, education, and other services without these contributions.
The discussion touched on the contentious politics surrounding mining, with Gene acknowledging the growing concerns about climate change. However, he highlighted the global reality: coal production reached record levels in 2024, driven by energy demand from emerging economies, such as China, India, Indonesia and Viet Nam, and the gas shortage due partly to the Ukraine conflict (see Global coal demand is set to plateau through 2027 – News – IEA). “If we don’t produce and export coal and gas, other countries will,” he observed, emphasising that Australia remains a critical supplier in a world still heavily reliant on fossil fuels for over 80% of its energy needs (Figure 1). Australia’s thermal and metallurgical (a.k.a. coking) coal is in demand for energy generation and steel production.
Tunny explained that while renewables are expanding, their intermittency presents challenges, such as the high costs of storage solutions like batteries and pumped hydro. These realities have increased power prices as countries transition to cleaner energy sources. He suggested that nuclear energy could offer a lower-cost path to decarbonisation in the long term. Still, he noted Australia’s current ban on nuclear development limits the exploration of this option.
The interview also explored taxation strategies for mining and resource extraction. While Queensland’s coal royalty rates were hiked in 2022, Gene noted that the federal resource rent tax for offshore oil and gas may warrant a review. He pointed to Norway’s approach—where the government partnered with oil and gas companies to secure substantial revenues—as a potential model for Australia to review.
Gene stressed the importance of informed public debate on energy and taxation policies throughout the discussion. He advocated for greater transparency and market-based solutions and cautioned against rushed transitions that could jeopardise economic stability and public services.
Gene offered a pragmatic perspective on navigating the complex interplay between environmental goals, economic realities, and public policy. As Australia grapples with energy transition challenges, his commentary underscores the need for balanced and evidence-based approaches to policy-making.
Published on 13 January 2025. For further information, don’t hesitate to contact us via contact@adepteconomics.com.au or by calling us on 1300 169 870.