Removing unnecessary regulatory burdens
Recognising Australia's declining share of international
energy and resources exploration investment, the Australian
Government has commissioned its independent research and advisory
body, the Productivity Commission, to evaluate non-financial
barriers to exploration investment. This inquiry is underway,
providing an opportunity for interested stakeholders (including
those in the regulated industry and finance communities) to weigh
in with comments and input to the Commission.
The Productivity Commission released an Issues Paper in December
2012 (Issues Paper), a copy of which is available
here. The Issues Paper notes a number of factors contributing
to the decline in exploration investment (for example, the
perception that Australia is a mature exploration destination which
provides fewer opportunities for discovery, the intense
international competition for exploration investment, and the high
costs of exploration given high currency and labour costs), but is
focused on one reason in particular: the impact of unnecessary
The Issues Paper notes such burdens not only impose
administration and operational costs but also fundamentally change
the way explorers operate and take advantage of opportunities.
Specifically, the Issues Paper has raised the following
regulatory issues for public consultation:
Increasing coverage and complexity of the permit and approvals
system as a result of incremental responses to various demands
rather than as part of an overall plan.
Longer and significant delays as a result of such increased
regulatory coverage. The Issues Paper notes that the approval
process can in some cases take up to 12 months before tenure to
explore is granted.
Unnecessary costs involved where applications for resource
exploration are also required to be submitted for a range of land
access, environmental and heritage requirements. Some reports note
that total administration and compliance costs account for up to 60
cents in every $1 of exploration capital raised.
Inefficiencies due to overlap and duplication between different
regulatory regimes, such as complying with the environmental or
heritage requirements of the Australian national, state and
territory governments. For example, the preparation of
environmental impact assessments under both Commonwealth and state/
territory environmental legislation can result in duplication and
Access to land issues, including the merits of the current
regime that excludes exploration activities from particular land,
or whether the processes and conditions placed on exploration
activities are unnecessarily onerous.
Whether there is an appropriate balance between heritage
preservation and resource exploration.
It is worth noting that the Australian Government specifically
excluded taxation and fiscal policy from the inquiry. However, the
Issues Paper does note that tax deductions relating to exploration
activities are important. Many commentators have also suggested
that the recently introduced Mineral Resources Rent Tax and carbon
tax have likely had a significant effect on investors' appetite
for committing exploration expenditure in Australia.
Other issues impacting on the performance and efficiency
of resource exploration in Australia
In addition to the current regulatory arrangements, the
Productivity Commission is also examining other non-financial
barriers to resource exploration, including: the skills shortage in
the resource sector (a particular issue for Western Australia and
Queensland); the adequacy of pre-competitive geoscience information
in order to assess productivity and reduce risks involved in
exploration area selection; access to infrastructure, such as
roads, rail, water and ports; the effect of differing occupational
health and safety regimes across various Australian jurisdictions;
and the ability (particularly of junior explorers) to raise
The Issues Paper notes that the wider Australian resources
sector is presently experiencing a moderation in resource prices
and a higher Australian dollar. In response to these pressures,
there are growing calls for governments to adjust policy settings
in order to reduce the cost base in the sector to ensure that
Australia remains internationally competitive.
Submissions must be sent to the Commission by 15 March 2013. We
are happy to assist you with any submissions you may wish to raise
in response to the Issues Paper.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
K&L Gates has been awarded a 2012 EOWA Employer of Choice
for Women citation acknowledging our commitment to workplace
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
It is a common misconception that the grant of mining tenure, whether it be an Exploration Permit, Mineral Development Licence or Mining Lease, will entitle the holder to access all land within it in order to explore or mine.
This briefing note sets out a likely structure for the proposed privatisation of the networks and identifies key issues.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).