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Tuesday, 6 June 1989
Page: 3413

Senator COLSTON —I direct a question to the Minister for Resources. Is the Minister aware of reports of allegations by the Minister for Mines, Energy and Northern Development in Queensland that there has been a 50 per cent reduction in gold exploration as a consequence of the Federal Government's decision that the gold mining industry should pay the taxes applied to all other industries? If these reports are correct, can the Minister inform the Senate whether the allegations accurately reflect the condition of the industry?

Senator COOK —I have seen reports attributed to Mr Martin Tenni, the Queensland Minister for Mines, Energy and Northern Development. He blames the Federal Government for a reduction in exploration for gold in Australia. I must say I find that quite an extraordinary allegation coming from him because he presides over a tax on gold which is a pernicious tax in its own right. It is a tax either on the production or, if the profit level is high enough, on profit. It is a State royalty tax which, if he is concerned about taxes as a deterrent to exploration, he has it within his power to remove entirely and provide a stimulus for exploration. Of course, he has not done that. One must view the allegations he makes from the point that they are hollow if he does not propose to put his actions where his mouth is.

The truth of the matter of gold exploration is that we intend to make the activity of gold mining subject to normal company tax which all other industries in Australia are required to meet. To describe it therefore as a gold tax is taking a liberty with the English language because it is a tax on companies; it is a tax on gold mining. The royalty that I referred to a moment ago that applies in Queensland is in fact a gold tax. It is not the one that we are applying. The figures for exploration according to the Australian Bureau of Statistics are that exploration for gold mining was down in 1988 not by the 50 per cent that Mr Tenni referred to but by 18 per cent. By contrast I note that gold production is 45 per cent higher in the March quarter this year than it was in the previous March quarter. Gold is now among our top four export earners. It earned Australia $2.4 billion in 1987-88.

The major reasons for the variation in exploration is that the world price of gold has fallen quite dramatically over recent months. The price has been falling in that sense since 1980. In January 1980 the price of gold hit $US850 an ounce. In January 1988 it was down to $US480 an ounce. Earlier this year the figure descended to between $US375 and $US400 an ounce. That reflects a decline in the value of gold on the world exchanges. That is the reason why there has not been a positive incentive for exploration. It is not the introduction of a tax on the companies that mine gold that this Government would wish to introduce. I would have thought that Martin Tenni would have understood the situation in terms of pricing.

As I have said, the Government decided in the May economic statement in 1988 that the exemption would end because there is no economic or other justification for it. It was a unique instance of a blanket exemption for an entire industry and for its entire income. Senator Walsh has often made the point that a significant proportion of overseas ownerships figures in gold mining ownership in Australia. The result is therefore that the exemption from taxation that these companies enjoy in Australia is transferred to overseas dividends. These dividends are taxed by foreign governments and thus they get the advantage that the Australian government should get.

As I have said, the Queensland Government imposes its own tax on gold. If the Queensland Minister is concerned he should do something about that. I might say about the Queensland tax on gold in the post-Fitzgerald Commission of Inquiry into Possible Illegal Activities and Associated Police Misconduct situation in Queensland where Premier Ahern is saying that all things are now open, all things are now transparent, that Queensland still remains the State in Australia that does not reveal how much it earns from gold taxation. I have estimated it through my Department at about $5m a year in royalties. But there is nothing on the public record which discloses openly and in a way in which the community can check what in fact the Queensland Government earns in gold mining income. If it is an open and accountable government one would have thought that at least it would have done that.