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Incentives missing

AS the Federal Government salivates over the billions it will earn from the Gorgon project, it would be worth its leadership considering how this potential resources revenue and vast billions that preceded it came to be.

Perhaps they would like to think about the fact that, from the earliest times, Australia and its ocean reaches have been criss-crossed by explorers seeking wealth to extract from this vast continent.

First it was timber and agricultural land, then gold and precious metals, then other minerals, before the mother lode of oil and gas was discovered.

Explorers of old were often paid to ‘unlock’ new territories by the governments of the time, which understood that to earn something, you should contribute.

These days, the modern explorers complain they get nothing.

It seems investors, with so many other options, are reticent to accept the high risk of exploration, particularly for minerals that have become increasingly hard to find in this well-covered country.

With Native Title issues and a host of other concerns, explorers who can get capital have turned their attention to other provinces, where distance and political issues have apparently diminished as doing business in Australia has become harder.

The cold hard facts are that, nationally, minerals exploration expenditure plummeted from a high of $1.15 billion in 1996-97 to just $640.6 million in 2001-02.

So, perhaps it is time for Canberra to listen to its own parliamentary committee, chaired by Bunbury-based MHR Geoff Prosser, which is yet another official report to back the idea of tax incentives for investors in minerals exploration.

The simple concept is called the flow-through share scheme, which allows investors to claim an immediate tax deduction for exploration expenses.

While I am not a keen advocate of tax incentives (I’d prefer to see lower tax rates across the board), in the face of the high tax rates we have to deal with, selective incentives are a worthy place to start. This is particularly the case for industries that provide the backbone of our nation’s stability.

Tree growers and winemakers have benefited from schemes to allow investors tax deductions in a bid to grow their industries. Why shouldn’t miners get the same incentives, if merely to provide a boost in tough times. If, indeed, this is just a cyclical downturn, the incentives can always be removed at a later date.

 

 Merry dance at Cancun

 IS the collapse of global trade talks in Cancun Mexico all that bad?

My experience of these processes is that all the disagreements are just positioning statements as the real work gets done behind the scenes – hasn’t every major trade fest ended in disappointment, yet decade after decade the worlds trading arrangements become freer.

The truth is that, as much as we have to gain from more liberalised trade, we are best off pursuing bilateral trade agreements, which we have some high chance of immediate and rewarding success.

Talks with the US, for instance, are well progressed and there is much short-term gain from earning privileged access to a major market.

While not everything about the a US free trade agreement is perfect, it is genuinely positive in an immediate sense, as well as an important long-term wedge to shift recalcitrant nations who don’t believe that global trade is a good thing.

Just as we jealously eye the European Union’s protected markets, bi-lateral agreements at least offer some certainty, as well as a strong negotiating position.

For those readers interested in trade, we have a special event on Monday with the Department of Foreign Affairs and Trade presenting three of our ambassadors from the Middle East to discuss trade opportunities there.

While this region is in turmoil, it has many opportunities for us during these trying times in international trade.

 

Report a little late

 SUSTAINABILITY seems to be the word of the month in the West.

While it is a serious subject, this week’s release of a major report into the subject by the State Government has that jingoistic sense of a feel-good subject needed to give some impression that something is being done.

I say that having only given it a cursory glance, one which confirms other early views that this is presciptive and formulaic rather than being visionary.

The cynic in me wonders why this sort of report is being launched now rather than at the beginning of this term of government, which might have at least allowed for a pre-election attempt at implementation.

Instead, we’ve had almost three years in a seeming big policy vacuum, except for unravelling perfectly good industrial relations laws and a decision to relocate a railway.

I fear, sustainability is a very soft concept that is bandied around without much real knowledge about what it truly encompasses.

Yes, having better housing or containing the urban sprawl are important but what about some real incentives to capitalise on the strengths of this State.

Sustainability is also about ensuring that we have ongoing markets for our produce and resources, that there are good schools for our kids (as  well as jobs when they graduate) and reasons for smart people to come here to live.

Some of this week’s announcements will help but I reckon they are just tinkering around with old ideas – potentially introducing more laws when they should be getting rid of a few first.

What we need are things that will put us on the map and keep us there.

 

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