Australian Geoscientist Skills and Employment Advancement Network |
TO: BOB STEVENS
WA Minister for Mines Office
Cc: AMEC, Chamber of Minerals & Energy, AusIMM, AIG
FAX: 93211445
FROM: John Williams - AGSEAN Chairman
Keith Wells - Vice Chairman
_______________________________________________________________________________
Dear Bob,
You asked me to send you a fax with a list of how the WA Government can best help to get this State out of the exploration crisis and assist the more than 1000 out-of-work geologists here.
The answers are straight forward and summarised as follows:
1. STATE GOVERNMENT TO LOBBY THEIR FEDERAL COLLEAGUES TO INTRODUCE TAX INCENTIVES FOR EXPLORATION INVESTMENT
The mining industry is the engine room of the WA economy, providing 72% of the state’s export income, over four times greater than the income generated by agriculture. To maintain this contribution, exploration needs to continually find new mines to replace older mined out operations.
ABS statistics show that exploration expenditure in Australia has now declined for eleven consecutive quarters from around $300 million per quarter in 1997, to approximately $165 million per quarter. Even this severe decline does not reveal the even more serious concern that much of the remaining expenditure is being undertaken on existing mine leases, so called "brownfields" exploration.
There is little or no greenfields exploration for new mines being undertaken. AGSEAN and other mining industry groups including the WA Chamber of Mines and AMEC have been warning about the consequences of the exploration recession for some time and recently the Premier, Richard Court has started to express some concern.
In addition to the serious longer-term implications for the WA economy, the steep decline in exploration expenditure is having an immediate and serious impact on employment in the exploration and support industries as well as the economies of regional centres. It has been estimated that approximately 50% of geoscientists in the exploration industry were seeking employment [R. Court, March 1999]. Now many have been forced to seek employment elsewhere. The failure of governments to effectively address the problem has resulted in a “brain drain “, a loss in experienced personnel from what was the world’s leading exploration industry. Not a very clever country!
The reduction in expenditure has had a serious impact on regional centres. Local businesses have closed and the decline in services adds to the falls in population and rateable income for the shires. All of which puts pressure on the State Government’s budget and status in regional areas and the main economic decline outlined above is still yet to come.
There are some obvious initiatives that could be taken by the State Government to reverse the trend:
Tax Incentives for Exploration
Incentive to invest in the industry is the key requirement needed to reverse the long decline in exploration expenditure. Tax incentives, where deductions for business expenditure can be transferred to investors are a well-established practise in the vineyard and tree plantation industries. No such incentives appear to be available to investors in the mineral exploration industry. To attract investors back into the industry a level playing field for investment needs to be established.
AMEC have proposed the introduction of a Flow Through Share Scheme, based on the Canadian model which raised around $C3 billion in investment between 1983 and 1991. We understand that a submission was well received by the Prime Minister’s office in June 1999, but to date has not been included in the broader tax reform agenda.
We would urge the members of the State Government to strongly lobby their Federal colleagues to introduce a taxation incentive schemes. The cost to the Federal Government would be minimal, the benefits to the States and the Country enormous. Tax income would be deferred not cancelled. The increased investment and expenditure will generate other tax income [for both State and Federal governments], additional employment and be a major boost to regional centres.
2. STATE GOVERNMENT TO INCREASE FUNDING OF MINE SAFETY TRAINING
The WA government needs to provide more CRF funding for practical TAFE mining safety training, and pay at least half of the TAFE course fees (as is done for farmers) so that Geoscientists and Engineers, can update their skills in mine safety, mine design and computer simulations of mining scenarios. This will help to maintain and improve the mining skill base in WA and the professional status of those with little current employment.
Background on State funding of Training
Agriculture WA spends about $33 million per year in farmer training. This does not include university courses, traineeships or apprenticeships (mostly Federally funded). It includes subsidies for farmers to study at TAFE, the cost of stand alone courses provided commercially or by Agriculture WA, and on-the-farm training by Agriculture WA.
On a similar basis, excluding Federally funded University courses, traineeships and apprenticeships, about $750,000 is spent in TAFE providing full time and part time training for mining technicians, mining assistants and mine managers. This includes a small amount of training for upgrading the skills of Professionals such as geoscientists moving from exploration to mining. It does not include other TAFE training for generic skills which may be used in mining. For example, lab technicians may be employed in mining, agriculture, food processing, chemical manufacture or power generation, and are not counted in either figure. The mining figure is just for specific mining training, as the Agriculture WA figure is just for specific agriculture training.
(both figures include a majority of funding from Federal grants to the state. A very small but similar proportion of each figure is actual WA money, despite the huge income in WA from mining.)
Many Exploration Geologists could find employment in the Mining Industry if they could obtain training and develop competence in specialist mining technologies. These competencies are not normally provided in university courses for these professions and are not usually developed in mineral exploration. In most cases, these skills are needed for the safe and efficient operation of the WA mining industry.
Specificaly we would like to see…
In addition to the above skills, recent graduates of Geology, Geophysics, Hydrology, and Mining Engineering operate with greater safety and are more employable, if they are trained in:
Four wheel driving Four wheel vehicle maintenance and trouble-shooting
Exploration drill supervision Bushcraft and survival skills
Courses covering this training are available through TAFE, but more teaching hours are needed if this demand is going to be met. An injection of $3,500,000 would provide an additional 50,000 teaching hours, or about 100 part time places for re-training and improving the WA workforce, thus ensuring our mining industry is safer and more productive.
3. WA GOVERNMENT TO INCREASE GSWA BUDGET
The Geological Survey of Western Australia (GSWA) is the principal state government funded geological agency providing geoscientific services to the exploration/mining industry. The regional and detailed maps, research project findings, and scientific databases provided by the GSWA are the base geological, geophysical, and geochemical data sets used by the industry in the planning, targetting, and early evaluation ("exploration") stages of resource assessment. As such, work undertaken by the GSWA is an intergral part of the exploration process and has been the cornerstone of many successful resource project discoveries in the past few decades.
At a time when the resources industry is in decline, the role of the GSWA has become even more critical in providing basic scientific data and highlighting prospective areas for current and future exploration. In many cases the GSWA is the only entity capable of major geoscientific work in regions which would otherwise be cost prohibitive for individual resource companies to tackle.
Planned funding cuts for the GSWA are illogical and detrimental to the long term future of the WA resources industry. If WA is to maintain its status as the premier resources state in Australia and the world a well funded GSWA is essential.
By comparison with the Province of Ontario, Canada, the combined Federal and Provincial spending on Geological survey is about 2 or 3 times what is spent in total in Western Australia, and yet mineral and fuel production in Western Australia is 10 times that of Ontario. We are using up our known capital reserves of ore, and we desperately need to spend more to assure reserves in the future.
An investment in the GSWA (by way of increased funding
for geoscientific research) at the present time is an investment in the future
of the WA resources industry and will pay handsome dividends by way employment,
taxes, and royalties to Western Australian community.
CONCLUDING REMARKS
Over the past 1-2 years AGSEAN has contacted many and various government representatives on the effects of the exploration crisis and it's consequences, especially for this State, unless something is done. The government must realise that to do nothing will only help to ensure that social and economic matters are going to get much worse. With the massive decline in the industry over the past 3 years, there has been an exodus of companies and professionals from WA and the mining industry. Until the WA resources sector regains its former impetus, State Government revenues will continue to decline, and the economic welfare of every person in this State will decrease. Time has run out and we are now looking for critical initiatives from our political leaders to stop the decline.