The Australian Government’s decision to dump the exploration development incentive (EDI) from its Budget this week is a betrayal of the mineral exploration industry in the country, according to the Association of Mining and Exploration Companies (AMEC).
The government move followed an internal review of the initiative, which was introduced less than three years ago. The EDI provided a 30 per cent tax credit for shareholders of mining companies that suffered losses from exploration spending.
Simon Bennison, AMEC chief executive officer, said the government was turning its back on future mineral discoveries and mining development in Australia with the decision.
“Industry is seriously disappointed at the level of ignorance in government relating to the benefits of this initiative,” Bennison said.
“The uninformed and breathtaking policy reversal by government and the department of industry is both short sighted and extremely disappointing for the Australian mineral exploration sector, and the nation as a whole.
“It will cost jobs and growth, particularly in regional Queensland and Western Australia.”
Bennison said the decision appeared to be the outcome of a non-transparent and unpublished internal review of the EDI, based on limited measurable data over a short timeline and conducted during a severe exploration downturn.
“There was also inadequate public consultation,” Bennison said.
“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 per cent for many Australian junior greenfield explorers, and undermine the nation’s exploration effort required to replace Australia’s ageing mines.”
It is not too late for the government to recognise the “severe consequences” of the move and critical need to discover new mines, Bennison concluded.