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Monday, 15 September 2003
Page: 19981

Mr PROSSER (12:40 PM) —On behalf of the Standing Committee on Industry and Resources, I present the committee's report entitled Exploring: Australia's future—impediments to increasing investment in minerals and petroleum exploration in Australia, together with the minutes of proceedings.

Ordered that the report be printed.

Mr PROSSER —On behalf of the House of Representatives Standing Committee on Industry and Resources, I have great pleasure in presenting the committee's report, Exploring: Australia's future—impediments to increasing investment in minerals and petroleum exploration in Australia. This inquiry arose from a reference from the Minister for Industry, Tourism and Resources received by the committee in May 2002. The minister requested that the committee inquire into and report on any impediments to increasing investment in minerals and petroleum exploration in Australia. The committee commenced its inquiry by examining the current status of resources exploration in Australia. It noted that the money spent on resource exploration had declined by over 40 per cent since the recent peak in the mid-1990s. At the same time, the known reserves of petroleum and of a number of key minerals are declining. The committee took evidence on a number of issues that may be responsible for the decline in exploration activity.

Globalisation has had a huge impact on resource exploration in Australia. The most visible indication of globalisation is the merging of almost all the major Australian exploration and production companies with foreign companies to form global entities. As a result many management decisions impacting on Australian projects are being made by non-Australians in head offices in foreign capitals. This has meant that Australian exploration projects have to compete head-to-head for financing against resources exploration opportunities in other parts of the world.

There certainly has been a falling away of expenditure by majors because of the market's preference for low-risk exploration. The dilemma now is that junior companies with smaller exploration budgets have been left by the risk averse majors to do the bulk of the high-risk greenfields exploration. Accordingly, the committee has recommended the introduction of a flow-through share scheme to make investment in exploration companies more attractive; adjustments to petroleum resource rent tax rates and offshore petroleum title conditions, particularly for deepwater exploration; and a liquids identification bounty scheme to encourage onshore petroleum liquids discovery. The exploration industry too can play its part by improving the quality of its initial public offerings to accommodate the market's preference for risk-managed projects.

The committee also sees the need for Australian governments to stimulate the search for the next generation of world-class resource deposits. Public geological data is already available to explorers. The committee recommends that the database be expanded by, among other things, an airborne gravity gradiometry survey of the Australian landmass. Similarly, the committee recommends that the CSIRO's Australia's Exploration Future initiative receive funding.

Certainly one of the controversial issues before the committee has been the extent to which native title considerations have restricted exploration. Successful exploration companies now accept that native title is here to stay and must be worked with. However, the resource industry is critical of the time-consuming and costly processes that can be involved in resolving land access issues. Accordingly, the committee has recommended that the costs associated with native title negotiations be fully deductible for tax purposes, that greater resources be provided to native title representative bodies to speed up the negotiation processes and that expedited procedures for low-impact exploration be employed more widely.

The committee believes that greater accountability must complement its recommendation to increase resourcing to native title representative bodies. It also sees that resolution of compensation matters needs to be based on more realistic expectations. To its credit, the resources industry continues to match statutory and self-imposed environmental standards. However, explorers say they are impeded by environmental processes. In this regard, the committee recommends that better environmental guidelines be developed for explorers. Further, environmental approvals processes, particularly for petroleum applicants and cultural heritage regulatory regimes, should be harmonised.

The committee also recommends that there be greater harmonisation across all states for mining title application requirements, approvals and attaching conditions. Australia is fortunate to possess a large resources base and stable economic and political systems. The country also has an excellent pool of exploration and research geoscientists and successful explorers. These provide an excellent basis for what is essentially a sound industry. The committee's recommendations seek to build on these strengths. I wish to thank the committee and the secretariat staff for their assistance. I commend the report to the House. (Time expired)