The astounding profitability of mining has helped drive Australia's prosperity over the past decade, but a report released today shows the sector has also been a major recipient of state government largesse.

While the states' coffers are boosted by royalties, analysis by the Australia Institute think tank shows that, in some cases, well over half of that money is handed straight back through direct and indirect grants.

The Australia Institute has pored over the past six budgets from each state and territory, finding at least $17.6 billion worth of assistance for the mining sector.

"They support the mining and fossil fuels industry more generally in quite a wide range of ways," said the institute's executive director Richard Denniss.

"There are direct subsidies exempting them from taxes, for example. There's the infrastructure that they build and supply to the mining industry, and then there's the more indirect ways, like providing cheap services."

Unsurprisingly, the mining states of Queensland and Western Australia top the list for mining hand-outs, spending $9.5 and $6 billion respectively.

Dr Denniss says in the current financial year almost 60 per cent of Queensland's mining royalties will be given back to the industry.

"The Queensland Government has spent about as much money supporting its mining industry as it's spent on building new hospitals," he observed.

"The Western Australian Government has spent about as much money as it spent on its police force. So, these are enormous sums of money."

'Wrong government priorities'

Iron ore is Australia's biggest export earner, but it doesn't receive the bulk of mining assistance from state governments.

"There's no doubt the coal industry is the biggest recipient of tax payer subsidies – both directly and indirectly," Dr Denniss added.

"So even the idea that this assistance is proportionate to the contribution to the industry just doesn't hold up, which again suggests that, if there's a plan, if there's a strategy that underpins this incredible tax payer generosity to the industry, it's not apparent from the numbers."

Dr Denniss says there is no logic to subsidising mining, as the companies will go to whichever state has the best natural resource deposits.

"Of all the industries that states should want to use subsidies to attract, the mining industry would be the last," he added.

"The thing that attracts the mining industry to a state is the quality and the quantity of the mineral resources, they can't threaten to take their mines elsewhere."

Queensland Nurses Union secretary Beth Mohle is among those who has been given a sneak peak at the report.

She says the figures fly in the face of the small government rhetoric coming from politicians and others, including mining magnate Gina Rinehart.

"The health system has suffered because the priorities of government are all wrong," she argued.

"It's not to say that there isn't a need for some form of subsidies, but really, surely the priorities must be in terms of essential service provision, and not in largesse to big business."

Even if such assistance can be justified, after spending weeks going through the fine print of budget papers, the Australia Institute says governments of all persuasions should provide that information up front.

Industry rejects 'Greens' report

The peak mining lobby, the Minerals Council of Australia, is hotly contesting the report's findings.

Its chief executive Brendan Pearson says regular analysis by the Commonwealth Government's Productivity Commission finds mining does not receive public largesse.

"The most independent analysis of assistance to industry sectors in Australia is that done by the Productivity Commission. It has found, year after year, that the mining industry receives no subsidies," he responded.

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Mr Pearson argues the mining industry is in fact a substantial contributor to government revenues.

"The Australian mining industry spend more on infrastructure and on building the towns, the networks, the infrastructure that service our mines than any other sector," he argued.

"It is an affront to the mining industry for the research arm of the Greens Party to again suggest that the industry is receiving billions of dollars in subsidies, when in the last six years alone, the mining industry's contributed $121 billion in federal and state revenues."

Report 'would embarrass North Korea'

The Queensland Resources Council (QRC), representing mining companies in the state that the Australia Institute report says has the biggest subsidies, says the report is full of "howlers" and "would embarrass the North Korean government."

The council's chief executive Michael Roche says most of the Queensland projects included in the study were paid for by mining companies, a fact he says is ignored in the study.

"Almost every capital project undertaken by government-owned businesses for resources sector power supply and distribution, water, rail and port capacity gets a headline," he said.

"These projects were executed on a fully commercial basis, with resources companies entering into commercial contracts that underwrote the capital expenditure and provided commercial returns to government-owned businesses."

Mr Roche argues that the state governments involved actually profited from much of the infrastructure investment.

"Not only were these projects undertaken at no cost or risk to taxpayers but their commercial returns were served up as government-owned business dividends in successive state budgets," he added.