The great LNG swindle


By Leith van Onselen

ABC’s The Business last night ran an interesting segment on the lack of tax paid on offshore gas projects, despite Australia vying with Qatar as the world’s biggest LNG producer. This has led to calls from a coalition of civil society groups for a parliamentary inquiry into the Petroleum Resources Rent Tax (PRRT), after revelations that these huge new gas projects may deliver no tax benefits to Australians for decades.

Below are the key points from the segment:

  • Australians pay three times more tax on beer than petroleum companies pay in PRRT royalties.
  • Qatar will receive $27 billion in royalties from its gas reserves in three years time, whereas Australia will receive just $0.8 billion in revenue from the PRRT.
  • Australia will lose hundreds of billions is lost tax revenue over the next few decades.
  • Tax loopholes that allows claiming exploration costs, plus the long-term bond rate, plus 18% uplift against the PRRT are underlying the revenue losses.
  • We need a parliamentary inquiry to examine the efficacy of the PRRT.

The Canberra Times has more today:

As pressure builds for a parliamentary inquiry into the petroleum resource rent tax, Fairfax Media can reveal that just eight out of 149 resource projects [5%] currently generating revenue contributed a cent in PRRT in 2014-15…

On Monday, the Greens backed a parliamentary inquiry into what Senator Larissa Waters called a “fossil-fuelled rort” while Treasurer Scott Morrison hinted at some concern within government…

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…

Resource tax experts like Diane Kraal, a senior lecturer at Monash University… warned that the PRRT will not deliver any significant revenue “in her lifetime” if its design is not overhauled.


The great LNG reaming continues…

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.