Last week, there was much excitement as flow-through snatched a few headlines courtesy of positive comments made by Australia’s resources minister, Ian Macfarlane.

Meanwhile, somewhere else in Canberra, sat treasurer Peter Costello, the man who will really decide whether Australian oil and mineral explorers will win their long-wished-for tax breaks that should, in theory, deliver a flood of fresh capital and encourage exploration in frontier basins.

The Slug does not wish to rain on the tax parade, but he cannot see Peter granting everything the exploration industry wants. It’s just not his style, and he almost certainly harbours some grave suspicions about the long-term benefits to the national economy of granting tax breaks to industry.

But before considering what’s happened lately and where it might be going, a snapshot of what flow-through means for readers unfamiliar with Australian tax law.

In essence, flow-through lets investors in exploration companies (rather than the companies themselves) claim the cost of exploration as a deduction. The primary benefit to investors is that they can better structure their investment and tax affairs.

The primary benefit to an explorer is that it becomes a tax-efficient form of investment, able to compete with other tax-efficient forms of investment such as property (where negative gearing is a major driving force), and agricultural crops such as trees, grapes and olives.

But – and this is a big but – Treasury officials have always been loath to give away too much, especially to companies engaged in mineral and oil exploration.

Why, you might ask? What’s different between investing in an olive farm and an oil exploration program?

The correct answer, of course, is not much. Both involve some risk. But the minerals and oil industry have had a habit of producing more than their fair share of, shall we say, fast operators.

The fear of letting explorers have too big a win because of past sins will be weighing on Mr Costello’s mind as he contemplates the very public push being mounted by his Cabinet colleague, the gravel-voiced Ian Macfarlane.

So, now comes the question of where is the flow-through debate heading.

Until Macfarlane voiced his support last week, Slugcatcher would have given flow-through Buckley’s chance of getting up simply because the issue has been talked to death several times.

On the pro side there has been the industry pointing excitedly at Canada, citing how its exploration industry has blossomed under flow-through. Macfarlane, bless his socks, appears to have signed up to this side of the argument.

On the con side, the bean-counters and “corporate irregularity” inspectors are saying the exploration industry will try to get away with murder as soon as you grant them flow-through.

The Slug, admitting a degree of concern about how politics is played, thinks he understand Macfarlane’s reasoning about flow through. The minister believes it’s time to go in to bat for the industry he represents and put flow-through on the agenda for Canberra’s razor gang, the dreaded expenditure review committee (ERC).

Having done that, he now has to argue before the ERC that flow-through will not be an excessive drag on the budget – and that means convincing Peter Costello.

Right now, many punters would have their money on MacFarlane delivering flow-through because it is unlikely that he would have stuck his neck out just to test the political breeze in Canberra.

But telling the industry you represent that you are working on their behalf to deliver a tax break is actually what you’re paid to do.

Delivering the goods in the next budget is what Peter Costello’s paid to do – and there might yet be a big gap between the positions of the resources minister and the treasurer.