Australia: Open for Business – a reform wave to hit the Australian resources sector

Energy, Infrastructure and Resources Alert
Last Updated: 18 October 2013
Article by Clive Cachia

The new Federal Government has flagged a number of reforms to kick-start the next phase of exploration, productivity and production in the mining and petroleum industries. The Government has expressed an urgent need to correct the real or perceived lack of business confidence in these industries over the last few years.

Ian Macfarlane, the new Minister for Industry (including responsibility for mining and oil and gas) commented: "We've got to make sure that every molecule of gas that can come out of the ground does so. Provided we've got the environmental approvals right, we should develop everything we can."

This reformist agenda is being supported by the New South Wales (NSW) Government in its proposed revisions to the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (NSW) (Mining SEPP) to emphasise the 'significance of the resource' in deliberations of the consenting authority for planning approvals.

In this Legal Insight, we look at the key proposed reforms by Federal and state governments, including:

  • the repeal of the carbon tax and Minerals Resource Rent Tax (MRRT) and cutting company taxes
  • the actioning of the Productivity Commission (the Commission) draft reports on the removal or easing of barriers to exploration investment and major project approvals
  • the implementation of a more stringent offshore petroleum licence policy to promote development
  • the proposed introduction of the Mineral Exploration Tax Credit
  • the proposed creation of the Industry Advisory Council
  • other industry specific initiatives
  • the proposed state reforms to the Mining SEPP.

The Carbon Tax, MRRT and Company Tax

The much publicised repeals of the carbon tax and MRRT have been proposed as one of the first agenda items of the new Government.

To repeal the carbon tax and MRRT, the Government will likely face opposition by the Labor and Greens members in the Senate, which will remain seated until July next year. This may prove to be a significant hurdle for the repeal of the carbon tax and MRRT once Parliament is recalled in the next few weeks.

In the event that there is a deadlock between the Coalition-controlled House of Representatives and the Senate, either now, or after the new Palmer United and micro-party senators begin their terms in July 2014, the Prime Minister may recommend a double dissolution of both Houses of Parliament. Whether or not the Prime Minister will have to resort to such a bold tactic, remains to be seen.

The new Government has also proposed a 1.5% cut in company tax from 1 July 2015. This cut will be welcomed by companies with annual incomes less than AUD5 million which will not be subject to the offsetting 1.5% levy to fund the proposed paid parental scheme. Many exploration companies are (unfortunately) in this bracket.

Actioning Productivity Commission Draft Reports

The Commission has recently been requested to review non-financial barriers to exploration investment (Barriers to Exploration Investment Report) and major project development assessment processes (Major Project Report).

The final Barriers to Exploration Investment Report was sent by the Commission to the Commonwealth Government on 27 September 2013 and is yet to be released. Please see our earlier Legal Insight on the draft version of this Report here.

The Commission's draft Major Project Approvals Report was released on 5 August 2013 and following further consultation will be sent to the Government in early December 2013.

The Commission has outlined five areas for improvement in the major project development and assessment process. These overlap the issues reviewed in the Barriers to Exploration Investment Report and include the following recommendations to ensure greater international competitiveness:

  • Clarify regulatory objectives: regulatory objectives should be clarified where they are vague, inconsistent or ambiguous.
  • Reduce regulatory overlap: establish a "one project, one assessment, one decision" framework for environmental approvals to reduce time and costs. The Government has already supported this move in its policy to have the States and Territories administer a single "one-stop shop" approvals process for on-shore resources developments, including approvals required under Federal legislation.
  • Improve transparency and accountability: focus on early consultation and guidance, separate policy and regulatory functions and adopt review mechanisms that promote transparency and accountability of decision makers.
  • Improve time frames: introduce 'major projects coordination offices' to proactively guide the multitude of approvals required from relevant agencies, with the view of expediting the approvals processes.
  • Reduce costs: most compliance costs are associated with fulfilling approval conditions and offsets, and the administrative costs of monitoring and enforcement. Increased emphasis on risk-based outcome-focused regulation will reduce unnecessary costs.

Stricter 'Use it or Lose it' Offshore Petroleum Licence Policy

The Industry Minister and new Government have expressed an intent to reform the current offshore petroleum retention lease policy. Retention leases provide security of title over an area which is not currently commercially viable but which may become so within 15 years.

The current legislative regime provides that if the recovery of petroleum from a retention lease area becomes commercially viable, an application to renew that retention licence must be refused. The lease holder should instead apply for a production licence. This is known as the 'use it or lose it' provision.

The Minister has identified a need to ensure that retention leases are not held to merely gain a competitive commercial advantage but are legitimately needed to secure petroleum for long term production projects. The Minister intends to review those retention leases that are set to expire in the next two or three years to determine whether to invoke the 'use it or lose it' provision if and when renewal applications are lodged.

Mineral Exploration Tax Credit

The proposed Exploration Development Incentive (the Incentive) is designed to promote investment by small exploration companies. The Incentive is to be implemented on 1 July 2014, and will allow eligible investors to deduct the expense of mining exploration against their taxable income.

The Incentive will operate as a tax credit to Australian resident shareholders for eligible greenfields exploration in Australia. The deduction will be restricted to those small exploration companies with no taxable income. Further, the Incentive is to be capped at AUD100 million over the forward estimates.

Industry Advisory Council

The Government's policy also includes the establishment of an Industry Advisory Council for the energy and resources sector. The proposed Council will be co-chaired by the Minister and an industry expert. Its purpose is to provide consultation and recommendations on proposed legislation or polices that will affect the energy and resources sector in order to promote consultation and certainty.

Industry Specific Initiatives

The Commonwealth Government has also proposed some specific initiatives within the energy and resources industry including:

  • formalising the agreement to sell uranium to India
  • reviewing the potential to develop thorium as an energy source for export
  • reviewing the potential for LNG to be a transport fuel for the Brisbane, Sydney and Melbourne transport corridors.

These and the other reforms can be expected to be included in a revised Energy White Paper to update the last version issued in 2012.


The NSW Government released a consultation draft of the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) Amendment (Resource Significance) 2013 (NSW) (Mining SEPP) earlier this year. The proposed revisions propose to amend the Mining SEPP to alter the weighting of considerations when determining a resources development proposal. The economic benefit of the proposed project, both to the relevant region and the State as a whole, is to be viewed as the principal consideration after an assessment of:

  • the size, quality and availability of the resource
  • access and the proximity of the land to existing or proposed infrastructure
  • the relationship of the resource to any existing mine
  • whether other industries or projects depend on the development of the resource.

The weight given to other factors such as land use compatibility, environmental effects, transportation and rehabilitation issues would be proportionate to that factor's importance in comparison with the economic benefits.

At this stage, the NSW Government is still reviewing submissions which have been made by the public on the draft Mining SEPP.

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 diversity.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

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”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.