Fossil fuel ruling looms
The energy industry has just a few weeks until the government-initiated review of the petroleum resource rent tax (PRRT) is finalised.
The big numbers that the PRRT was supposed to bring are dwindling - bringing in revenue of $880 million last year, which was $120 million short of expectations. A shortfall of over $200 million is expected this year.
But the bill has been dropping for almost all of the last 20 years, averaging around 0.2 per cent of GDP in 2000-01, down to an average 0.12 per cent in the period 2002-03 to 2015-16.
Additionally, the Australian National Audit Office’s review of the North West Shelf Royalty Revenue concluded that neither the administration nor the collection of royalties was “efficient or effective”, formal agreements were lacking, and “significant shortcomings” existed in the royalty calculation framework.
These factors have pushed the union-linked Tax Justice Network (TJN) to call for an end to the “free ride” they say Australia's offshore oil and gas industry enjoys.
The lobbyists want a 10 per cent Commonwealth royalty to be applied to all current and future offshore projects subject to the PRRT.
With the PRRT review due in April, WA Liberal Senator Dean Smith has warned that any changes could harm an industry that the Australian workforce – in rural areas in particular – relies on.
“Already, Australia's petroleum exploration activity has seen a significant fall,” Senator Smith writes in a column for Fairfax.
“The problem is further exacerbated when coupled with the global trend that is re-orientating exploration to shallow-water basins closer to established projects and away from frontier and deep-water exploration.
“The success of Australia's oil and gas industry has underpinned our economic success for decades, and it is an investment that has greatly benefited regional economies and been a key driver of jobs growth.
“With Australia already considered a high-cost destination for oil and gas investment, reform should be contemplated only if it strengthens, rather than dampens, Australia's attractiveness for further investment in exploration. This will ensure Australians continue to receive their fair return from the countries resources for generations to come.”