Minerals exploration is important.
We live in a world where it’s easy to forget that so much of what we use and so much of what we depend upon is made from things that have to be found and dug up.
The best example that I can think of that is this – the mobile phone, the smart phone which almost everybody has and is made up of more than 25 different metals. All of them mined here in Australia.
Everything from silicon to make the screen, to lithium and cobalt in the battery. To silver and gold that you find in the electronics of the phone. To aluminium used to make the case.
You can’t have the benefits that these devices provide without the resources needed to make them.
This phone is just one example of that.
The plates we eat off have zircon in them.
This glass is made from silica.
The sunblock we use when we go to the beach has zinc and ilmenite in it.
This microphone has copper in it.
Minerals are all around us – hiding in plain sight.
They’re not easy to spot here.
And they’re not always easy to find beneath the earth’s surface either.
It’s hard work.
Exploration is a slow process, and without a proven resource it’s always possible that you won’t find something worth developing.
It’s expensive, and hampered by unpredictable commodity prices.
These factors add a lot of risk, and for that reason it can be difficult for junior minerals exploration companies to generate the capital needed to undertake the exploration of undeveloped regions.
Over the 5 years to 2015-16 expenditure on greenfield exploration around Australia has dropped by around 70 per cent.
In 2014, to try to encourage more exploration the Government introduced the Exploration Development Incentive.
This was a $100 million dollar scheme which was supposed to incentivise greenfield minerals exploration.
Unfortunately this Incentive was not fully used by industry and the decline in greenfield mineral exploration investment has continued.
The feedback from the minerals exploration industry is that one of the reasons the incentive wasn’t fully used is because it was too complex to access.
This legislation that we’re debating tries to fix this. It makes a number of changes to the incentive. It implements a first come first served approach and introduces caps on how much individual companies can access.
The trend of declining investment in greenfield exploration is a concern to the Labor Party. I’m sure it’s a concern to all Members here, at least it should be.
That’s why we’re supporting this amendment, because we think it could help junior minerals exploration companies to attract capital and finance greenfield exploration.
Around 700 junior resource companies could be eligible under this scheme and it has the potential to drive engagement and growth in greenfield exploration.
The proposed incentive is only available to junior exploration companies with no assessable income in a tax year, and it excludes companies that have commenced resource production or that are connected to another company that has commenced resources production.
We think this draws a reasonable distinction between junior exploration companies and larger resources companies and that this incentive is targeted towards companies that are serious about greenfield exploration.
The explanatory memorandum to the amendment notes:
It is the Government’s intention that the Department of
Industry, Innovation and Science will review the operation of the JMEI scheme by 30 June 2020 to assess both its uptake and efficacy in attracting investment.
That’s a good thing, but we think this legislation could go one step further. We think there should be an annual impact assessment of the scheme – that should be a legislated requirement, and that should be publicly available.
The Member for Fenner has foreshadowed in his contribution a moment ago it is our intention to move amendments in the Senate that would require an annual impact assessment to be conducted.
The objective of it being to identify whether this legislation – these amendments – would lead to additional exploration or prospecting as a result.
In addition to that the Commissioner of Taxation would make publicly available the ABN and name of an entity receiving credits, and the amount of credits given.
We think this is important. It’s important that we understand if we’re providing an incentive to business what the impact of that incentive is, whether it’s worked or not. Whether it’s encouraged more exploration or not. Whether it’s delivered value for money to the Australian taxpayer. It’s how we develop evidence based policy. Assess it, pressure test it, make it public. If it doesn’t work change it.
The Shadow Minister has foreshadowed our intention to move amendments to this effect in the Senate.
I understand that the Government is currently considering that.
I encourage the Government, when this gets to the Senate to support this amendment.