Jim Chalmers’ long-awaited tweaks to the PRRT are the itsy-bitsyest “reforms” about, the equivalent of recycling old Christmas presents with a fancy new bow. Michael West reports on how the Treasurer is merely returning a couple of billion in gas sector subsidies, and only for a while.
“Chalmers slaps $2.4bn tax hit on oil and gas,” cried Murdoch’s The Australian. “$2.4bn gas tax hit on energy giants,” declared the AFR. Santos chief Kevin Gallagher was nowhere to be heard with his “Soviet-style” scaremongering. Is Australia still going the way of Venezuela and Nigeria, Kevin?
Not on your Nelly. The foreign gas giants are profiteering from Australia’s resources like there is no tomorrow, and paying pocket fluff in tax to boot. Treasurer Jim Chalmers’ long-awaited tweaks to the PRRT are itsy-bitsy, the equivalent of recycling old Christmas presents with a bright new bow, really just “up-fronting” a piddling amount of gas revenue for the next few years, a clawing back of subsidies for a while.
You know it’s a fake “hit” when the fossil media talks it up as a “hit” but the gas lobbyists from APPEA say it gets “the balance right”. Reality is there is no balance, just ongoing pillage.
That’s not a tax … this is a tax
Check this chart by Daniel Bleakley comparing Norway to Australia and including the latest impact of the PRRT fiddling. To paraphrase Crocodile Dundee: “That’s not a tax … *this* is a tax.
This from CICTAR analyst, formerly with the Tax Justice Network:
“I was hoping that the government would make positive changes to the PRRT, in particular the gas transfer pricing mechanism. I had prepared a statement to celebrate changes to be announced in the budget, but these changes appear to be total BS! I have trashed my prepared statement.
“APPEA is celebrating the changes, which tells you everything. After Treasury started the consultation on the gas transfer pricing mechanism in 2019, it issued its final report yesterday (Saturday).
“It appears that it will not increase revenue raised over the life of projects, but bring forward some revenues by capping the use of deductions each year. It looks like it will raise about $2bn in the forward estimates (4 years).
This quote from the Treasury report sums it up pretty well.
“Indeed, some projects may not be sufficiently profitable to pay any PRRT over their project lives in the event of sustained lower LNG prices, regardless of the recommended change. In such circumstances, Australians will continue to forgo any return attributable to their ownership of the recovered gas.”
“So put differently,” says Ward, “The Australian government is willing to keep giving away our gas to the world’s largest multinationals in the hope that someday Chevron, Exxon and others might pay some corporate tax on the $93bn in annual LNG exports and maybe create a few jobs and sell us back some of our gas … Pretty disgraceful and very disappointing, but I guess I should not be surprised.”
As @FetchStep described it on Twitter: “Jim Chalmers, Federal Labor Treasurer, just gave that exact amount back to the gas industry in he past few months alone – $1.9b for Darwin Gas export hub, $78m to the NT frackers and $512m for a gas powered urea factory in WA. There is no “tax increase”.
Opportunity lost, again
With all this talk of inflation and dire warnings about the Budget being too generous to the poor, you would think the most obvious solution to everything would be to tax foreign fossil fuel multinationals properly. The rise in energy prices is one of the big culprits in the inflationary spiral. A tax would not only be fair, it would make economic sense too.
The rub is of course, to follow the money, the gas lobby is one of the biggest donors to both major parties, as are their advisers from Big Four consulting firms. So it is that both parties are feckless when it comes to reform of any substance – as the planet cooks.
It is probably worth closing with the inimitable observations of Shadow Treasurer Angus Taylor who told ABC’s Insiders show this morning that “This is not Vladimir Putin’s inflation, it’s Labor’s inflation”. Where to begin? Inflation *is* a global thing, moreover it started under the last government. There have been 11 rate rises since the stimulus of the last Budget in March.
And let’s not forget what inflation actually is … companies putting up prices. Almost 80% of Australia’s inflation is companies putting up their prices and none are so rapacious as the energy giants, as energy costs go into almost every product and service. We will hear a lot more politicking and silly claims in the coming week as it is Budget week.
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.