By Andrew Mackinnon

The resources in Australia, such as coal, iron ore and natural gas, are owned by the Australian federal government on behalf of Australian citizens, not the mining companies which extract them.

The ownership of these resources by the Australian federal government on behalf of Australian citizens is a separate concept from the cost of mining companies extracting these resources, which cannot be avoided if these resources are going to be utilised.

The mining companies could extract these resources for the Australian federal government in a physical amount set by the Australian federal government. This distinction of the Australian federal government setting the physical amount of resources to be extracted, given its ownership of them on behalf of Australian citizens, is possibly missing from the way the mining industry operates today.

It would be logical for the Australian federal government to pay the mining companies the extraction cost of the extracted resources and continue its ownership of the extracted resources on behalf of Australian citizens.

The Australian federal government could then sell the resources to Australian entities and Australian citizens at prices which cover the extraction costs and thereby minimise the cost to Australian entities and Australian citizens of utilising the resources, such as for generating electricity, in the case of coal, for manufacturing steel, in the case of iron ore, and for heating, in the case of natural gas.

The Australian federal government could sell any surplus resources to overseas countries at prices that exceed the extraction costs in order to earn profits. These profits could be added to the consolidated revenue of the Australian federal government, which includes taxation revenue, in order to reduce the flat rate of income tax of a maximum of 20%, which should be the only tax in Australia.

This proposal is based on the idea that although the Australian federal government owns the resources in the ground in Australia on behalf of Australian citizens, the resources must be extracted before they can be utilised. The Australian federal government would contract with mining companies to perform this extraction and continue its ownership of the resources by paying mining companies the cost of this extraction.