Australia Could Collect More From Mining and Energy Booms, Report Says

The $45 billion question

Australia’s resource tax system may leave as much as $45 billion a year uncollected when commodity prices and company profits rise. That’s the central claim from Prosper Australia, a tax reform think tank, and it turns a familiar argument about mining taxes into a sharper question: who should benefit when finite public resources become unusually valuable? The group says governments should collect more during commodity booms, while still allowing companies a commercial return for the capital, technology and expertise they bring. Coal, iron ore and gas belong to the public, it argues; once extracted and sold, they’re gone. The report calls for changes to the tax system so public revenue rises more automatically when resource profits surge. The headline estimate spans state and Commonwealth revenue. Prosper Australia puts the potential increase at about $28 billion a year from mining, including coal, iron ore, gold, copper, lithium and other minerals, plus $16 billion to $18 billion from oil, gas and LNG.

The estimate comes from a report released last week, Australia's resource wealth giveaway: How weak public capture leaves billions in revenue on the table. Its author, Richard Wielga, is a former economist with Victoria’s Department of Treasury and Finance. The report compares Australia’s tax and royalty arrangements with those in Norway, Alaska, Chile, Peru and Québec, as well as Queensland’s coal sector. It asks whether systems collect more when prices and profits climb, how much revenue the public receives, and whether higher public returns necessarily deter investment.

Comparisons need context

The report measures “public capture” as the share of value created by resource industries that reaches the public. On that measure, Australia’s petroleum sector fares poorly against Norway and Alaska. But the comparison has limits: Norway’s model includes state participation in projects, unlike Australia’s private-operator system. Prosper Australia removes that activity from Norway’s figures to make the comparison closer, and adjusts Alaska’s numbers too. Mining tells a more complicated story. Australia’s public-capture ratio is higher than the observed ratios for Québec, Chile and Peru, despite relying heavily on low, flat royalties while those peers use more boom-sensitive regimes. The report says that result doesn’t prove Australia’s system is well designed. Commodity mix, prices, project age and operating costs all shape what governments collect. Australia has large, mature, high-volume iron ore and coal industries; the comparison countries produce different minerals under different cost conditions. Tax administration and compliance can also affect the figures. The data offers a useful warning against simple rankings, but it doesn’t isolate the effect of tax design.

A tax can look strong on paper

Australia’s Petroleum Resource Rent Tax was designed to tax exceptional profits from offshore petroleum projects, giving it high theoretical sensitivity to a boom. In practice, it hasn’t delivered strong, timely revenue, and current forecasts show no sustained improvement. That’s a useful distinction for anyone weighing resource-tax proposals: a tax’s stated purpose doesn’t tell you how it will perform. Prosper Australia argues that generous or complicated rules can leave a rent tax collecting far less than its design suggests. The PRRT’s record, the report says, is a case for better rules, not proof that taxes on super-profits cannot work.

Queensland offers a test case

Queensland’s coal royalties show what a more progressive schedule can look like. Since July 1, 2022, the rate has risen through six price bands: - 7% on the first $100 per tonne - 12.5% on the portion from $100 to $150 per tonne - 15% on the portion from $150 to $175 per tonne - 20% on the portion from $175 to $225 per tonne - 30% on the portion from $225 to $300 per tonne - 40% on the portion above $300 per tonne Before the change, the highest rate was 15% on coal prices above $150 per tonne. Prosper Australia says the new schedule is more responsive to booms than a flat royalty. The early figures don’t show an immediate collapse in the industry. Active mines rose from 53 in 2021–22 to 60 in 2024–25; coal employment stayed near 26,000 on a four-quarter average, and saleable output was “particularly stable,” according to the report. The latest Queensland government figures record 58 active coal mines in 2025–26. Those numbers matter because operators have blamed higher royalties, alongside falling coal prices and rising costs, for job cuts and production reductions since 2025. But a royalty change alone can’t explain whether a mine stays open: weaker prices, rising costs or an ageing deposit can make a site uneconomic even under a carefully designed tax. The figures challenge the claim that higher royalties automatically drive activity away, though they don’t settle every question about the policy’s longer-term effects.

Make public returns rise with prices

Prosper Australia’s prescriptions are straightforward: modernise royalties, address the shortfall in petroleum revenue, and preserve a commercial return for viable projects. One option is to tie royalties to market prices, increasing the public share when prices rise above long-run norms. Another is a minimum royalty floor paired with a second component linked to prices, profits or margins. The case for a floor is practical: it guarantees some public return while production continues, while a boom-sensitive component lets that return grow in stronger markets. The report doesn’t specify a new Commonwealth petroleum tax. Instead, it says future reforms should follow the same principle: when resource prices and profits surge, public revenue should rise too.