I rise tonight, Mr President, to draw attention to the alarming downturn in mineral exploration in Australia, particularly in Queensland.

It is said that Australia’s wealth grew from the sheep’s back.

That is true but it is also true that since early colonial times, our mineral resources have also contributed to the wealth of this great nation.

The sheep has been shorn, as it were but fortunately, mining continues, at least for the moment. 

We have indeed been a ‘lucky country’. 

Since the gold rush of the 1850s, Australia has prospered from the country’s varied and vast mineral deposits.

In the last 20 years, the minerals industry has contributed $500 billion to our wealth.

Today, Australia is benefiting from a robust minerals industry with mining representing 8% of the GDP. 

No wonder the standard of living in Australia ranks among the world’s highest. But, that’s not all Mr President. 

 Mining has also played a key role in the development of regional prosperity.

Since 1967, 26 towns, 12 ports, 25 airfields and over 2000 kilometres of railway line owe their creation and continued existence to mining. 

If I may be parochial for a moment, Mr President, much of Queensland’s preeminence as Australia’s leading export state comes from its mineral wealth.

Cities such as Mount Isa, Charters Towers and Cairns were all initially established as mining or mining support centres. 

Queensland’s mining sector today is worth more than $16 billion per annum. More than twice the value in the 1990s. 

95,000 Queenslanders owe their livelihoods to the industry.

It is the biggest employer in regional Queensland. 

It contributes around $965 million in royalties to the Queensland Treasury. 

Without this income stream, Queensland’s Labor Government's fiscal incompetence would more fully exposed than it is.

These figures underscore the fact that we have a substantial resources base. The third largest in the world after the US and South Africa. 

We have the world’s largest reserves in zinc, lead, nickel and uranium, and Australia is within the top six for gold and copper. 

Queensland’s north-west is ranked as one of Australia’s most prospective exploration provinces. 

It has 28% of known lead and zinc deposits – the richest in the world; 5% of the world’s silver and 1.5% of the world’s copper. Weipa, in the far northern tip of Cape York has the world’s largest bauxite resource. 

However, Mr President, Queenslanders, indeed all Australian’s, should not be complacent about this treasure chest. The mining industry is in danger of catastrophic decline. 

In the last financial year, $1.028 billion was spent on exploration. That is 25 % less than in 1996. 

In real terms, exploration expenditure throughout Australia is at its lowest levels in almost 30 years. 

These statistics reflect a very substantial downturn in activity. 

Despite its potential, mining companies are not fully exploiting Australia’s immense resources. 

This country is under-explored. There has not been a significant mine discovery in the last six years and there’s a danger that Olympic Dam in South Australia will be the only metallic mine in Australia by 2030.

That’s barely 24 years away. Currently, we are living off the capital of mines discovered many years ago.

Even if a substantial deposit was found now, it could take up to 15 years for the mine to be made operational.

In the meantime, Australia’s share of investment in global exploration at 12.6%, is at a 20 years low and 30% down on the historical average. 

It also means Australia has slipped from second to fifth in global mining exploration expenditure. 

The unpalatable fact, Mr President, is that we now lag at the back of the exploration queue. Canada dominates the exploration race and is now the favourite country for exploration projects. Countries such as Chile and Peru attract more attention. 

Today, there are 152 mines in Queensland, but by 2030, only those digging coal and bauxite will remain – unless exploration for base metals and gold is accelerated. 

No world-class deposit has been discovered in Queensland for 15 years.

Only eight small mines have been established since 2000. These have a life span of up to only 15 years. 

And I have spoken before about the vast resources of uranium in the state which have so far gone unexploited. 

The simple reality is that we need a great deal more investment to rekindle the mineral exploration sector.

In 2003, the Prosser Report found three major impediments to the exploration industry. 

First, the globalisation of the minerals industry has resulted in countries other than Australia being preferred for mining development. 

Second, regulatory constraints imposed by Native Title, cultural heritage, environmental and operational requirements add to costs and are disincentives. 

 Third, exploration is usually left to the smaller or junior mining companies that have limited investment funds.

It is also useful to add the obvious resources, in accessible places, have been found. It is the little known, risky areas that need to be explored. 

The major mining companies however, are reluctant to spend millions of dollars on risky areas. 

Junior mining companies, find it difficult to access capital from investors seeking higher, less risky returns on their capital. 

There is an irony in our current situation. In general the mining industry is enjoying buoyant times. It is experiencing a significant world-wide boom. Prices for mineral commodities are at 20 year highs. 

True, there has been an increase in global exploration expenditure but Australia is attracting too little of those exploration dollars. 

Instead, mining companies in Australia have been relying on brown field exploration to meet the demand of the resources boom rather than taking advantage of high commodity prices to undertake the riskier and more expensive ventures in green field exploration. 

This lacks foresight It will not sustain us into the future. 

We need to be encouraging mining companies to look outside the brown circle and search for sizeable, exploitable deposits known to exist in green zones. 

The challenge - not just a Queensland challenge, it is an Australian challenge - is to find the next generation of mines by finding new ore bodies that will supplement and replace the finite reserves of existing mines. 

Australia’s position as a supplier is not under threat in the short-term, but it is in the long-term. The situation is more worrying. 

We have the opportunity to ensure Australia’s continued prosperity by providing incentives to go out and discover new deposits. 

I believe part of the answer is to look anew at the introduction of a flowthrough shares scheme as an incentive. 

It is a simple equation, Mr President; mining companies raise capital for exploration by passing on their tax deductions to the individual investors. 

It has proved to be of immense value to Canada which now attracts about 19% of the world’s exploration capital.

To obviate the rorting of the initial flowthrough share scheme, Ottawa legislated Super flow-through shares on a threeyear trial under the Mineral Tax Exploration Credit scheme.

The success of the current scheme, is such that it has been extended three times since 2000, and now runs to 2007. 

Flow-through shares, Mr President, make it easier for junior mining companies to access much-needed capital for exploration. 

In Australia, governments should also encourage mining companies to invest in the higher-risk green field exploration by providing high quality geoscience information. 

Improved geoscience will facilitate the next generation of ore discoveries through improved remote exploration techniques. 

Mr President; Australians generally are unlikely to get too emotional, too exercised about the potential problems the industry faces, and this is understandable. 

It has always been something somewhat removed from the day-to-day lives of most of us. 

 But the potential adverse impact on those lives, should mining be allowed to wither, would be sorely felt by the average Australian. This is a tragedy we have to avert. 

Some might say that a multi-billion dollar industry does not need government assistance. In one sense, that is true, but to offer incentives for development is to offer political leadership.

Our mining industry in Australia is facing a potential crisis. We need more exploration, we need more investment, and the federal government has a role to  play. Failing this, a great industry will die and that will be to the cost of every Australian.