Multinational gas corporations are expected to sell $50 billion worth of Australia’s liquefied natural gas (LNG) overseas every year, but it will be at least 10 years before the national treasury receives any rise in tax revenue. Even then, many projects will never pay any tax to the government for the resources they export.
A report prepared for the federal government into the operations of the Petroleum Resource Rent Tax (PRRT) shows that revenue from the offshore gasfields will remain static until at least 2027.
Modelling for the review found the sector would pay just $12 billion in PRRT by 2027. During that period, sales to markets such as Japan, South Korea and China could reach at least $400 billion.
In comparison, Qatar, which is the world's largest LNG exporter, is estimated to take in $26.6 billion through its flat, volume-based royalty in 2021, when Australia would sell the same amount of LNG. But the review did not recommend implementing a royalty-based system, claiming that companies had invested under the current PRRT, and that, "Any significant increase in the tax on existing petroleum projects ... may deter future investment.”
The report recommended possible "substantial changes to the PRRT regime" for new projects. But, for current projects, it recommended a number of smaller changes, such as streamlining paperwork with the Australian Tax Office.
The Tax Justice Network (TJN), which has criticised the limitations of the PRRT for some time, said the changes would make it easier for companies to claim deductions and transfer credits between projects.
"It appears reducing paperwork for multinational corporations has been prioritised over protecting the Australian community and our shared interest in these resources," TJN spokesperson Jason Ward said.
"This report and the response from the Treasurer will only increase community concern over the integrity of the PRRT and represents a significant missed opportunity," he added.
According to Dr Dianne Kraal, a Monash University expert on the PRRT, the proposed amendment to the tax would apply to projects that will take decades to get off the ground.
"If it is included in the budget it is worth nothing really. They are so far off and they are marginal projects," she said.
As it turned out, despite the reports of possible changes to the PRRT regime in the recent federal budget, Treasurer Scott Morrison failed to address the tax in his speech. A spokesperson for the Treasurer said the government is still considering changes to the PRRT.
Meanwhile, the Greens have proposed a flat royalty on oil and gas, which could raise as much as $15 billion over the next 10 years, as Australian LNG production booms.
"A simple 10% royalty would bring us into line with other jurisdictions around the world who are not giving away their national wealth for nothing," Greens Treasury spokesperson Peter Whish-Wilson said.
"These global giants aren't paying close to what they would pay in other parts of the world, we are all being fleeced because oil and gas giants write their own ticket when it comes to how much they pay," Whish-Wilson said.