Good morning, Mr. Chair and committee members. My name is Philip Bousquet. I work for the Prospectors and Developers Association of Canada. I'm here with Eira Thomas. She is a member of the PDAC board of directors and executive chairman and director of the Stornoway Diamond Corporation.
Thank you for providing us with an opportunity to meet with you today.
The PDAC is a national association whose members are involved in the mineral exploration and development industry, both in Canada and around the world. Our membership includes approximately 1,000 corporate members and 6,000 individual members, comprising mineral exploration and mining companies, service and consulting firms, geologists, geoscientists, students, environmental consultants, and the financial, legal, and investment sectors.
The PDAC organizes an annual convention in Toronto, which is the world's premier mineral industry trade show. In 2009 our convention attracted 18,000 delegates from 120 countries.
As the research and development branch of the mining sector, exploration companies do not have production revenue and therefore must rely on investors who are prepared to support high-risk activities. In the past year, the global financial crisis and a steep drop in commodity prices have had a dramatic and negative effect on the exploration sector. Reduced investment in companies leads to fewer drilling programs and impacts negatively on regional employment and income, particularly in rural, northern, and aboriginal communities.
Working with our members, the PDAC has developed proposals to reduce the impact of the crisis on the mineral industry in Canada.
Number one is a mineral exploration tax credit. As many of you know, this was introduced in 2000 and has consistently provided Canada with one of our competitive advantages. In January the credit was extended for one year to March 31, 2010. The mineral industry is recommending that the current 15% METC become a permanent feature of the federal income tax system. This will provide additional certainty for companies and for investors.
In order to counter the current economic crisis and encourage investment in Canadian projects, we are also recommending a temporary increase of the mineral exploration tax credit from the current 15% rate to 30% for the next two years.
Number two is investing in transportation infrastructure. For instance, all-weather roads, bridges, and upgrades, as well as improvements to seaports and airports in Canada's north and remote regions of the provinces, greatly improve the economics of exploration projects, increasing access and allowing for extended exploration seasons. As well, maintaining a long-term commitment to the geo-mapping for energy and minerals program, or GEM program, will improve our knowledge of Canada's resource potential and encourage new exploration.
In number three, we are looking to improve an exploration company's ability to retain employees by allowing issuance and compliance costs, that is, costs associated with financing legal and accounting expenses, to qualify for renunciation as Canadian exploration expense, or CEE, under flow-through share arrangements.
We believe these recommendations will have an overall positive impact on the economy by encouraging investment in research and resource activities that are critical to Canada's economy. A vibrant mineral sector in Canada creates jobs in all regions of the country, sustains communities, fosters new business opportunities, and raises tax revenues that allow government to meet social needs.
I will now ask Eira Thomas to offer her perspective on issues faced by exploration and development companies.
Thank you.