Gas robber barons howl as QLD hikes royalties

Banana Republic 101. Two former resources ministers from opposite sides of the aisle squealing simultaneously at new gas royalties. One at The Australian:

Former federal resources minister Martin Ferguson warned last night that the Queensland government’s surprise 25 per cent hike of gas production royalties in the state budget would jeopardise investment in mining and ­increase energy prices.

The one-time Labor Party and ACTU figure, who also opposed the Rudd government’s resource super-profits tax, which blind­sided the mining industry in 2010 and sparked a backlash, said Queensland Treasurer and Deputy Premier Jackie Trad had made the same mistake by failing to consult over the “tax grab”.

“This is going to effectively ­increase the price of gas and probably raise serious questions in the minds of investors about sovereign risk,” Mr Ferguson told The Australian.

The other at the AFR:

The resources industry has erupted at the Queensland government’s decision to lift royalties on the gas industry.

“This will make Queensland gas less competitive and will risk jobs and future investment, and the creation of new jobs,” Queensland Resources Council chief executive Ian Macfarlane said on Tuesday.

He was speaking after the state budget was released, showing how the government would increase the petroleum royalty rate from 10 per cent to 12.5 per cent of wellhead value from the next financial year.

As two competing papers run by corporate apologists trot out the same old “sovereign risk” lie. There is no more investment coming, there is global glut of gas as far as the eye can see.

None of the gas firms pay any tax because they are still enjoying the preposterous uplift rates in their depreciation write-offs resulting from massively misallocated capital into LNG export overcapacity.

Meanwhile, the entire east coast economy is burdened with a $15-20bn gas and power price shock as the export cartel offsets loss-making exports of gas with an epic price gouge at home.

And the QLD Government is the “sovereign risk”?

Comments

  1. At least somewhere in Australia is getting some benefit from “our” gas. Good on them.

  2. kannigetMEMBER

    Oh My God, we have to stop them raising the royalties….. The Gas Cartel will stop the flow of Gas if they have to pay any more royalties…. We all know that every smart investor will refuse to make 99% profit if forced to pay 1% of tax…. Cant we just think think of the poor CEO’s…

  3. Jumping jack flash

    Can’t see the problem unless gas retail price is regulated.
    As far as I knew it was market driven.

    All this will mean is more expensive gas, and therefore more expensive electricity.

    Unless I’m wrong, the only problem here is that the gas companies didn’t think of doing it first, and won’t directly benefit from additional price gouging. As usual, consumers will simply pay more.

    Whew, lucky they lowered interest rates otherwise I don’t know how people would afford it. Just top up the mortgage to pay the electricity bill. Its cheap!

    On the bright side for the economy, it should all add to the inflation calculation, even that little, grossly underweighted portion that is cost of living.

    Because operating in the 2 – 3% band is the sweet spot for national economic success.
    Who cares what wages and consumers are actually doing, right?
    Any moment now, wages will shoot up as a result of that cut. And if not, certainly from the next cut.

  4. Can she put a tax on LNG instead of gas?

    That would mean no price rise for gas consumers in Queenslanders while getting some tax revenue from LNG consumers in the northern hemisphere.

  5. This might open the discussion within federal treasury for a similar level of export duties. A duty would mean that the east coast gas price remains the same (but not the export price) and the nation gets some value for the people’s resource. Or just impose 7% of production to be allocated gratis (i.e. a tax in kind) to be used for the essential public service called “Australian electricity”.

    Screw ‘em- they’re going to scream anyway, so why not make it worthwhile? Time for the gloves to come off.