**Check against delivery
Simon, firstly, thank you for hosting this gathering of the mining industry this morning.
And thank you all for coming - I know that right now there is a lot of apprehension in the room about the government's new tax plan - but I also know that nothing will be resolved unless we continue to talk to one another.
And the Prime Minister and I are pleased to be here in Perth today to do just that.
We moved very quickly on Sunday to set up our Resources Tax Consultation Panel, led by David Parker from the Treasury.
The Panel has already begun discussions with companies and it will be working intensively over coming weeks and months to sort through the technical details of transition - because we want to get this tax reform right.
The Resources Tax Consultation Panel is a formal consultation process and we invite you all to participate in it.
My door is always open, but the first step you need to make is to register with the Resources Tax Consultation Panel and start working through the formal process.
Around every reform there is room for negotiation around the finer detail.
The Panel is prepared to run the ruler over what the new tax plan means for your projects and your plans - this is a genuine consultation process.
We recognise the mining industry is a very important sector of the Australian economy but we have to get the balance right between promoting investment in it - and ensuring a fair return for the nation from our resources.
By reforming the tax system with the Resource Super Profits Tax (RSPT) and the new Resource Exploration Rebate (RER), the Australian community will share the costs of exploration - and the returns from exploration - when the value of discoveries is realised.
Let me turn to some of the detail of our proposals.
The Government will introduce a 40 per cent Resource Super Profits Tax (RSPT) on non-renewable resources from 1 July 2012.
The RSPT will apply to all mining and petroleum projects, with the exception of projects currently covered under the PRRT regime, for which opt-in arrangements will be developed in consultation with industry.
We are moving away from output-based taxation.
At the same time, the company tax rate will be reduced from 30 per cent to 28 per cent starting in 2013-14.
I have already heard from some companies regarding their concerns about:
- The scope and coverage of existing projects under the RSPT;
- At what stage a development is captured under this system; and
- Is a project a single project or several?
Questions have also been raised which require clarification around the starting base, taxing point and uplift factor.
We are listening to the industry and we will look at these issues through our consultation process.
In addition to the RSPT, the Australian Government will introduce a new Resource Exploration Rebate (RER) that will provide an immediate tax offset at the company tax rate for eligible exploration expenditure.
This is a great initiative.
Compared with larger miners, smaller companies face a competitive disadvantage because losses they generate from exploration often cannot be used to offset other taxable income.
So our intention is that the RER will significantly benefit small, pre-profit exploration companies.
The RER is a simpler and more effective way to promote investment in exploration than a flow through shares scheme.
The fact is small exploration companies do not currently receive a tax benefit from their deductable exploration expenses until they become profitable.
With the RER we are removing the cash crunch which has proven to be a handbrake on the exploration activities of Australia's small explorers.
You know better than I do that the cost of exploration has risen dramatically in recent years, so exploration costs are not always the best measure of exploration growth or decline.
So when I tell you the ABS figures released on 10 March 2010 show mineral exploration expenditure for 2009 was down 22 per cent from the record of 2008 - at about $2 billion - you know this is very grave.
The number of exploration metres drilled in 2009 fell 25 per cent to just over 7 million metres.
The other important thing is that brownfield drilling in 2009 was 67 per cent, up from 61 per cent in 2008.
This continues the long-term trend away from greenfields exploration.
If the Australian resources sector is to continue to grow, we must find the new Olympic Dams, the new Prominent Hills and the new Mount Isas.
That's why we think the Resource Exploration Rebate is so important - to encourage more exploration, particularly in greenfield and frontier areas.
The new reforms mean the resources sector will also benefit from more investment in infrastructure.
In the mining boom mark 2, we cannot afford the capacity constraints of the last boom.
We want this boom to be defined by sustainability - we want to keep and grow our global market share of major commodity markets like iron ore, copper, coal and LNG.
That means investing in a skilled workforce and investing in export infrastructure to support export volume growth - not just riding the wave of high commodity price cycles.
The Government will make annual contributions, starting at $700 million from 2012-13, to address infrastructure bottlenecks.
About one-third of the Treasurer's package announced over the weekend will directly assist the resources sector.
The package will deliver more than $5.6 billion over the next decade to fund the roads, railways, ports and utilities we need to unlock Australia's resource wealth.
This will help Australia's resources industries to achieve their full export potential, free of the capacity restraints that have the potential to slow future growth.
It will mean that States and Territories will benefit from increased infrastructure investment.
This will build on the $22 billion 'Nation-building for the future' package announced in last year's Budget - an investment that the resources sector is already benefiting from.
Let me also remind you of the history of the Petroleum Resource Rent Tax which has been around for more than 25 years.
There was a lot of fear about this tax as well.
But the Hawke Labor Government did what we are going to do - work with you to get the detail right - for you and for the nation.
The PRRT has been one of the most stable taxes in the world, the industry supports it, and exploration and development in the oil and gas industry has flourished.
Under the PRRT, Australia won both the $12 billion Pluto and $43 billion Gorgon gas field investments in 2007 and 2009.
Both of those projects were Australia's biggest ever at the time of their announcements.
And, under the PRRT, Esso and BHP have extended the life of Bass Strait for decades.
With sensible changes over the years, most recently to lower compliance costs and remove inconsistencies, the PRRT has proven to be consistent, simple and effective.
By contrast, let's look at the inconsistencies in royalty arrangements in the big three mining states.
In Queensland and New South Wales the systems for coal royalties are different and complex, and not even uniform across commodities within the states.
And in both states there have been increases over the last 12 months.
In Western Australia we have yet another variable royalty system based on either flat rates or ad valorem rates - and while the Premier has ruled out an increase in gold royalties for the next year, there is no certainty beyond that.
Ladies and gentlemen, the story of the PRRT is clear evidence that consultation works.
The Prime Minister, the Treasurer and I are committed to a genuine and open process to make sure we get the settings right and we want you to put yourselves in the formal consultation process as soon as possible to help us do that.
That's why the Prime Minister and I are here today.
Twenty-five years ago, all the talk was about the PRRT.
Petroleum exploration and development did not flee from Australia - it flourished.
If we get the design detail of the RSPT right - with your help - in twenty-five years from now, we will reflect on the RSPT as ultimately establishing a stronger resources sector and a more resilient economy through a fairer and simpler tax system.
Thank you.