A NEW report is critical of money the NSW government has pumped into the Cobbora Coal Project at what it says is the expense of schools, hospitals and emergency services.
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The report released by Canberra-based public policy think tank The Australia Institute suggested state governments had been providing billions of dollars in subsidies to the minerals and fossil fuel industries over the past few years.
Titled Mining the age of entitlement - state government assistance to the minerals and fossil fuel sector, the report indicated NSW was the nation's third-largest contributor, handing $872 million to the mining industry over a six-year period.
Coal mining assistance in NSW consisted mainly of subsidies for 'clean coal' research, funding the state-owned Cobbora Coal project and direct assistance to mines in the Gunnedah and western coalfields, The Australia Institute executive director Dr Richard Denniss said.
"Seventy-six million dollars has been spent just on feasibility studies for the economically-questionable Cobbora Coal project, for which the NSW government is unlikely to see any return," he said.
"State governments are usually associated with the provision of essential services like health and education so it will shock taxpayers to learn of the massive scale of government handouts to the minerals and fossil fuel industries."
That $872 million in state mining subsidies it was claimed had been handed out by the NSW government in the six-year period could have delivered 116 new schools, according to the report.
The report also suggested the economic rationale for the Cobbora Coal project, which was originally proposed to supply below-market-price coal to state-owned power generation assets, had "always been under question".
"This certain economic loss has caused the NSW government to withdraw from the original proposal to own and operate the mine, but it is still persisting with efforts to have the project approved for potential sale or lease," the report read.
"Through the analysis period, $76 million was spent on the project's feasibility studies. Ongoing operating loses of the Cobbora Holding Company are not included in our analysis as they do not appear in identifiable form in the budget papers and our analysis is limited to examining spending on capital investments of government-owned businesses rather than ongoing operations.
"It is worth noting, however, that the Cobbora Holding Company runs at an annual loss of around $6 million."
The NSW Minerals Council, however, described The Australia Institute research as "another dodgy anti-mining report".
It said the report "completely ignores over $120m in fees and levies the industry pays the NSW government every year, including the Mine Safety Levy, Coal Washeries Rejects Levy, Mine Subsidence Levy, Administration Levy, and the New Frontiers Levy, as well as hundreds of millions in payroll taxes and millions in environmental licence fees."
Even if the Australia Institute's findings were accurate, a NSW Minerals Council spokesperson said, the taxpayers of NSW were receiving mining royalties valued at over $1.3 billion each year - around ten times the amount the Australia Institute claimed the industry received in 'subsidies'.
In response to the report, Dubbo MP Troy Grant said almost a year ago then-Treasurer Mike Baird announced the government had sold Eraring Energy to Origin Energy and in exchange for payment terminated its obligation to develop and then operate the proposed coal mine at Cobbora.
"This decision saved the NSW taxpayer not only the $1.5 Billion cost to develop the mine, but meant that the taxpayer was no longer exposed to hundreds of millions of dollars in potential damages payments," he said.
"The net transaction cost to the government at the time was around $75 million, but it meant that the taxpayer would avoid liabilities of over $1.75 billion."
