A decision by the Australian Federal Government to scrap the Exploration Development Incentive (EDI) is a betrayal of the mineral exploration industry in Australia, according to the Association of Mining and Exploration Companies (AMEC).
The government “is turning its back on future mineral discoveries and mining development in Australia,” AMEC chief executive officer Simon Bennison said, “and industry is seriously disappointed at the level of ignorance in Government relating to the benefits of this initiative.
“The uninformed and breathtaking policy reversal by Government and the Department of Industry is short sighted and extremely disappointing for the Australian mineral exploration sector, and the nation as a whole,” he said. “It will cost jobs and growth, particularly in regional Queensland and Western Australia.”
Simon Bennison said it appeared that the decision was an outcome of a non-transparent and unpublished internal review of the EDI, and based on limited measurable data over a short timeline and conducted during a severe exploration downturn. There had also been inadequate public consultation leading up to the decision.
“The EDI was originally set up as a long-term initiative, but it has now been cut short after less than three years despite it having minimal impact on the Budget.
“The impact of the backflip is that it will effectively increase the after tax cost of exploration by 30% for many Australian junior greenfield explorers, and undermine the nation`s exploration effort required to replace Australia`s ageing mines.
“The repetitive comments from senior Government Ministers that the mining investment boom has come to an end are tiresome, false and completely misleading.
“There are vast areas of Australia that have never been explored, or are under explored and still highly prospective. The economic opportunities from discovering new mines to replace those that are coming to an end, are enormous.
“It is not too late for the Government to recognise the severe consequences, and the critical need to discover new mines. To do this you need mineral exploration companies with access to risk capital to drill holes. The Government should continue to support and improve the much-needed EDI tax offset arrangements over the long term.
“This is an opportunity for the Federal Government to show proactive leadership and vision for the future by agreeing to rollover the EDI for 2017/18 and future years.
“Economic growth and jobs are at stake for future generations of Australians for what is a small and sensible investment,” said Simon Bennison.