Only about half of Australia's mining boom windfall was spent properly by the Howard and Rudd governments, think tank Per Capita said in a report released on Monday.

Of the more than $200 billion windfall, Per Capita noted that the Howard and Rudd governments used about half of $105 billion to boost the Commonwealth's fiscal position. About $36 billion went to the payment of sovereign debt and another $69 billion into long-term savings fund.

However, Per Capita said the remaining $75 billion was not spent properly. The report said the Howard government gave away $25 billion in tax cuts and concessions while another it spent another $50 billion on inflated spending programmes and various cash handouts. Among the cash handouts were the baby bonus and the First Home Owners' Grants.

Per Capita pointed out the $75 billion could have been used on long-term productive assets.

"We could have built a high-speed rail link down the east coast, or funded hundreds of thousands of skilled cadetships, or rolled out solar generation farms to power our mining and aluminium sectors," Courier Mail quoted the report.

Per Capita said the misuse of the mining windfall on tax cuts and spending growth left Australia unprepared for the change in economic circumstances caused by the 2008 global financial crisis.