You make a very sensible point but I am sure it will be totally ignored by the Rudd government because it will be seen as paying off the rich.

The GFC is also having a major impact on juniors because it is almost impossible to raise money for smaller mining ventures.

If they did the sums on the apparent lost revenue in the area under consideration, they would probably find that it would be more than compensated for by the extra income tax derived from those many workers whose jobs would be maintained. A lot of these people earn considerably more than the average and as a consequence are paying tax at a higher rate than the average, notwithstanding the tax benefits obtained because they live in remote areas.

David

It does make you wonder about the political donations of the big boys like BHP/Biliton who have an interest in keeping competitors out of the market to the detriment of competition.

ATO mining our economy?
That's socialism.

Junior exploration companies getting tax deductions?
That's capitalism.

wait - hang on a minute - -

The government has a R&D tax deduction scheme that works well for small research and development companies. When a company is not making a profit and so cannot claim the rebate on income the government instead gives the company a rebate. The company now spends the money on more R&D. This could be applied to exploration companies. It has the effect of increasing the cash available for R&D by up to 1/2 over the years. In other words if you spend 1M on R&D and make no profit then next year you will get about 300K rebate - which you can spend and get another 100K from that expenditure next year and so on.

This works very well as a way of encouraging small R&D companies which are very similar to exploration companies in their business model.

Is there any evidence that the level of exploration in Australia is below an economic level?

If you want to see a practical example look at the level of exploration for geothermal energy in South Australia (SA because it has legislation that offers security of title ).

Geothermal energy has got to be risky as it has exploration risk, development risk and market risk that probably exceed other resources. Yet no shortage of venture capital is evident? All likely prospects are being invested in.