News release by the Qld Resources Council. Seems like Labor will introduce it as part of their election promise (assuming it's not a "non-core" promise). ========
Jobs for Queensland in tax proposal
The Queensland Resources Council says Queensland would be a big winner in jobs and new investment with the federal government’s adoption of a flow through shares (FTS) scheme.
Replicating the Canadian Government’s scheme that has seen that country elevated to top ranking among global minerals and petroleum exploration companies, an Australian FTS scheme is projected to have an immediate and lasting impact on new job creation and investment.
Co-launching an economic modelling report spearheaded by the QRC and endorsed by nine other resource sector bodies, Chief Executive Michael Roche said the creation of up to more than 4,000 new exploration jobs – mainly in Queensland and Western Australia - was the right stimulus package for Australia at the right time.
‘Australia has a task ahead of it in reviving its global exploration investment appeal and a FTS scheme for junior exploration companies is a strong launch pad to increase the likelihood of quality mineral, oil and gas discoveries,’ Mr Roche said.
‘Queensland has an overwhelming interest in promoting the discovery and development of new minerals and energy deposits, particularly in the north of the state as mines such as Ernest Henry, Century, Cannington and Osborne approach the end of their economic lives.
‘Ailing global and domestic economies, coupled with a state government committed to making Queensland the greenfields exploration capital of Australia by 2020 points to this being the ideal time for a FTS scheme to create much-needed new jobs, stimulate new investment and put Queensland in the driver’s seat for the inevitable revival of global minerals and energy demand.’
Under existing Australian taxation arrangements, junior exploration companies with little or no taxable income are unable to immediately deduct exploration expenses.
‘The bottom line is that exploration companies spend a lot of money to find resource deposits,’ Mr Roche said.
‘With the vast majority of junior explorers without an alternative income stream, the absence of immediate tax deductions for exploration simply pushes costs higher resulting in lower levels of activity and fewer substantive new discoveries and new projects.
‘What a flow through share scheme does is accommodate the transfer of unusable corporate tax deductions through to a junior company’s Australian shareholders.
‘Eligible shareholders would then be entitled to use ‘exploration tax credits’ to offset their tax liabilities thereby maintaining investment momentum, as demonstrated successfully in Canada for more than a decade.’
The report released today provides strong evidence that the immediate implementation of a FTS scheme for Australian junior exploration companies would result in increased exploration expenditure of 10-30 per cent.
‘Resource exploration is labour intensive and demands constant servicing by other industries, as a result of its focus on remote parts of the country such as north and north west Queensland,’ Mr Roche said.
‘The immediate deductibility of eligible expenses is a key parameter of Australia’s company taxation system and recognises the longer term benefits of exploration and the associated financial risk.’
The resources sector is seeking a conversion of the election commitment into a scheme capable of generating between now and 2012-13:
Up to 4,196 new jobs
$114 million in additional gross domestic product
$191 million in additional real private consumption
$965 million in additional real investment
Mr Roche said that while not the subject of this analysis, the substantive longer-term benefits of a FTS scheme – when greater exploration expenditure is converted to higher mine production – have been recognised by not only Canada but also the Australian Labor Party as part of its 2007 federal election platform.
Media contact: Jim Devine (61-7) 32959560
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