Monday, 14 July 2014
I rise today to discuss the important measures the coalition government is putting in place to assist the mining, exploration and resources industries get back on track. I am proud that Kalgoorlie, one of Australia's mining centres, is a big part of my electorate of O'Connor. Founded in 1893 when Irishman Paddy Hannan struck gold, Kalgoorlie was born when fortune seekers from across the country descended on the region. Over the next 120 years the mining of gold, along with other metals, such as nickel, has been a major industry. Today it employs about one-quarter of Kalgoorlie's workforce and generates a significant proportion of its income.
The Super Pit, the biggest open-pit mine in Australia, is located right next to the town and has been operated by Kalgoorlie Consolidated Gold Mines since 1989. At 3.6 kilometres long, 1.6 kilometres wide and more than 600 metres deep, the Super Pit is as deep as Uluru is high and has about the same circumference. The Super Pit produces up to 850,000 ounces of gold every year and its operation far outweighs any other mining centre in Australia. But, as great as the Super Pit is for the goldfields' economy, the current reserve has a finite mine life, as all current deposits do. This is an important point in looking to the future of the region's economy, and also Australia's. While greenfields exploration expenditure has remained relatively stable in real terms over recent years, it has fallen as a proportion of total exploration from 40 to 33 per cent over the last decade.
Last week, the Minister for Industry, the Hon. Ian Macfarlane, chose Kalgoorlie to regionally launch the federal government's Exploration Development Incentive scheme. Starting on 1 July 2014, the EDI is a $100 million incentive to allow investors in junior companies to deduct a proportion of their exploration expenditure against their taxable income. The EDI will free up resources for the private sector and create better incentives and more opportunities for businesses and individuals to succeed.
While in Kalgoorlie, Minister Macfarlane reiterated:
Exploration is a precursor to development and production and exports. If you're not doing the exploration work then the future looks grim.
At the moment we are facing the reality of a 10-year low in greenfields exploration. Although there are some drillers who remain pessimistic about the EDI and think it is not enough, in reality the $100 million will create $300 million worth of capital for exploration. If we have long-running operations looking at closing in the next 20 years, we need to find the new deposits now so that the industry will keep running for another 100 years.
This sentiment is echoed by the Chamber of Minerals and Energy of Western Australia's chief executive, Reg Howard-Smith, who said after the announcement on budget night:
All resources projects begin with a discovery and to that end, CME welcomes the continuation of funding for the Exploration Incentive Scheme.
He goes on to say:
To establish a future pipeline of projects we rely upon increasing the current level of exploration activity here in Western Australia.
The EDI is about ensuring that we regain and maintain the momentum of discovery and ensure that we have a rich and prosperous way forward. I cannot stress enough how important it is for anyone who is eligible to make the most of the EDI.
There are two other measures that I believe will also help the mining and resources industries: repealing the minerals resource rent tax and repealing the carbon tax. The minerals resource rent tax damaged international investor confidence in Australia, in particular in the energy and resources sector. Repealing this tax will provide a boost for the mining industry and is a strong step towards repairing the perceptions that international investors have formed about Australia over recent years. The repeal of the minerals resource rent tax and its associated expenditure will not only improve the budget bottom line but will save millions of dollars in compliance expenses for small, medium and large entities. The cost of the carbon tax on Australia's minerals industry exceeds $1.2 billion a year; when the price of emissions permits, the impact on diesel fuel and higher energy charges are included.
Maintaining a high fixed price on carbon will continue to damage the competitiveness of Australian businesses, especially in mining and resources. I urge the Senate to repeal the carbon tax bill so that the mining and resources industries can focus on getting back on track. I firmly believe the EDI and the repealing of the minerals resource rent tax and carbon tax will benefit the mining and resources sectors and underscore the words of the Prime Minister on election night so that Australia really is open for business.