Call for inquiry into lost gas and oil tax income

Origin Energy’s Australia Pacific liquefied natural gas facility at Curtis Island in north Queensland
Contributed from Queensland

As the vast reserves in the nation’s north-west and Queensland are exploited, Australia is poised to become the world’s biggest gas exporter, expected to soon overtake the Gulf nation of Qatar. But the tax revenue for Australia from this boom is almost non-existent. We are giving our gas away. We are also giving away our oil exports in the same way.

the Tax Justice Network – a coalition involving churches, welfare groups, unions and other community organisations, has now launched a campaign for a parliamentary inquiry. The network believes that the Australian people benefit fairly from the exploitation of our own natural resources.

Stunning media reports have revealed that the primary tax on oil and gas (the PRRT) is projected to fail to collect any meaningful income despite Australia becoming the world’s largest gas exporter.

Lost tax income means lost opportunities to properly fund schools, hospitals and childcare centres; boost Newstart back above the poverty line; and build critical infrastructure for the 21st Century.

Dr Mark Zirnsak who is the director of justice for the Uniting Church’s Victorian and Tasmanian synod and convenor of the Tax Justice Network, says the deductions companies can claim against the tax are so broad, the community is being denied sufficient return.

According to a recent report by  Heath Aston in the Sydney Morning Herald, “Just five per cent of oil and gas projects operating in Australia are paying anything towards the Federal Government’s royalty-like scheme designed to share the wealth generated by the nation’s resources with the public that owns them”. It goes further. “Eight out of 149 resource projects currently generating revenue contributed a cent in PRRT in 2014-15”.

Researcher Jason Ward, from the Tax Justice Network, has warned that Australia’s PRRT is failing to ensure the federal government gets a fair share of revenue from the exploitation of the country’s natural resources.

This is a deplorable state of affairs that is costing Australia dearly.

ATO data shows the oil and gas industry, which is now dominated by multinational-operated LNG projects off the Western Australian coast and Queensland’s coal seam gas sector, had revenues of $25 billion last year.

Direct connections between the multinational oil and gas company’s Australian business and Bermuda emerged as Chevron and seven other companies face questions from the federal parliamentary inquiry into corporate tax avoidance.
A letter consigned by 21 unions and community organisations, including the Australian Council of Social Service, the ACTU, Greenpeace, the Australia Institute, ActionAid, GetUp and the Uniting church has been sent to Malcolm Turnbull and Scott Morrison calling for a parliamentary inquiry into the PRRT.

“The undersigned organisations have major concerns about forecasts of declining or stagnant government revenue from the PRRT coinciding with Australia becoming the world’s largest exporter of LNG,” the letter says.

“LNG will soon compete with iron ore to become Australia’s largest export. However, various analyses show that the primary resource tax on this export, the PRRT, will not collect any new revenue for decades to come.

“The PRRT system, based on voluntary compliance and self-reporting [by gas companies], operates with limited transparency and inadequate oversight. Australians need greater public confidence that they will benefit fairly from the exploitation of our natural resources.”

In 2010 the Henry tax review warned the PRRT  “fails to collect an appropriate and constant share of resource rents from successful projects, due to uplift rates that overcompensate successful investors for the deferral of PRRT deductions”.

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