Tax incentives for exploration and mineral exports continue to support Australian economy

first_imgA statement last week from Brendan Pearson, Chief Executive, Minerals Council of Australia notes the December Quarter National Accounts confirm the ongoing contribution of minerals exports to economic growth in Australia. Figures released last week by the Australian Bureau of Statistics reveal that mining and finance made the largest contributions to Australia’s trend growth of 2.3% in the year to December 2014 (0.5 percentage points each).Further, the increase in gross value added by mining in the year to December 2014 (seasonally adjusted) was:A$60.2 billion (16.3%) for iron ore miningA$21.1 billion (6.7%) for coal miningA$134.6 billion (8.9%) for mining as a whole“While the industry faces a more constrained environment, it is important not to take for granted the gains secured from a larger mining industry and the extent to which they endure,” he said.“If the growth in mining (including oil and gas) had been zero in the year to December 2014, then:The Australian economy would have been A$134.6 billion smaller in seasonally adjusted termsAustralia’s GDP for the year to December 2014 would have been A$1.444 trillion instead of A$1.578 trillion in seasonally adjusted termsAustralia’s trend growth rate for the year to December 2014 would be 1.8% instead of 2.3%.“[These] National Account figures reflect just how important the long-term success of the mining industry is to the overall national economy.”The MCA and Pearson also welcomed the passage of legislation to implement an Exploration Development Tax Incentive (EDI) for investment in small mineral exploration companies undertaking greenfields mineral exploration.“The EDI is timely with the value of mining exploration falling by more than 40% over the past four years and Australia’s attractiveness as a destination for mining investment declining.“The passage of the legislation is an important achievement for Industry Minister, Ian Macfarlane who has consistently championed the case for removing structural obstacles to minerals exploration.“The minerals industry also commends the bipartisan support for the legislation provided by the Labor Party, led by Shadow Resources Minister, Gary Gray.“The passage of the EDI sends a strong signal to investors that the Australian government backs the mineral exploration sector for the long-term and will go some way to addressing Australia’s fall in investment attractiveness as reported by the Fraser Institute Survey recently.“The EDI should provide an additional boost to Australian junior exploration firms at a time when other countries have acknowledged the challenges of continuing exploration.Earlier last week, the Canadian government extended the exploration tax credits offered to its miners for another year and has broadened the scope of the credits in an effort to boost mining exploration activity.The Queensland Resources Council (QRC) and Queensland Exploration Council (QEC) have also congratulated Macfarlane on the passage through Federal Parliament of the new measures designed to boost minerals and energy exploration.QRC Chief Executive Michael Roche said the Exploration Development Tax Incentive scheme passed by the Senate was bringing Australia into line with jurisdictions like Canada in encouraging exploration investment and activity.Under the scheme, eligible (pure) explorers can convert a portion of their tax loss to exploration credits, which are then available to shareholders as a tax deduction. The scheme starts on July 1 2015 and will be capped at A$100 million over three years before a review.“Industry has been calling for a federal exploration incentive scheme since 2009, and it’s a credit to Minister Macfarlane that his legislation passed the Senate with the full support of the Labor Party, led by shadow resources minister Gary Gray,’ Roche said.Picture: Dampier Salt, Rio Tinto Diamonds & Mineralslast_img

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