Calls for FTS Unheeded

A call by by Australia's leading professional and resource industry groups for the introduction of a Flow Through Shares scheme for mineral and energy resource exploration went unheeded by the government in Tuesday's Federal Budget.

Exploration industry representatives have been calling for the introduction of FTS by 30 June 2009.

At a time when the government is spending billions of dollars on economic stimulus measures to mitigate the impacts of the current global economic downturn, the most economically effective stimulus measure available according to a study by Synergies Economic Consulting.

Compared with other industries often promoted as vehicles for generating increased economic activity, ‘resource exploration' ranks #1 in terms of value-adding and #3 behind ‘residential construction' and ‘financial services' in terms of employment generation.

The government's response to representations has been that the FTS issue will be adressed by the Henry enquiry into Austtalia's taxation system, due to report to the Treasurer during December 2009.

AIG does not accept this response.

FTS is considered to be a key measure to:

stimulate geoscientist employment;
enable exploration companies to generate capital needed to fund exploration;
reduce cyclicity in exploration expenditure;
enhance the standing of geosciences as a career (with indirect benefits for a host of industries) and,
maintain Australia's resource project pipeline which sustains the mining and energy resource industries

FTS simply provides exploration companies with no income access to a tax deduction availale to every Australian company, by allowing the benefit to flow through to investors.

AIG continues to call on the government to honour its pre-2007 election promise to i mplement a FTS scheme by acting immediately to realise the benefits clearly demonstrated by existing economic modelling of the costs and benefits of an FTS scheme for exploration.

Andrew Waltho

14 May 2009.

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