‘For every $100 of gas exported, Australia gets 43 cents’: Unions open new tax battle

3 hours ago 2

Fresh from its backflip on superannuation tax reform, the Albanese government is now facing calls from the union movement to ditch its changes to taxes on oil and gas exports, in a move the ACTU says would raise $17 billion a year to be pumped into housing.

This masthead can reveal the peak union body believes the petroleum resource rent tax (PRRT), which the government overhauled in its first term in a bid to raise more revenue from the impost, should be axed and replaced with a flat 25 per cent tax on all LNG exports.

LNG leaves Gladstone Harbour in Queensland. The ACTU believes the federal government should slap LNG exports with a 25 per cent levy.

But the business community believes the best way to lift productivity and strengthen the economy is for Treasurer Jim Chalmers to pick up key proposals from his economic roundtable, including tax incentives to boost business investment.

This year, the PRRT is forecast to raise almost $2 billion, but the ACTU believes a 25 per cent tax would earn the federal government $17 billion that could be used by the government to build 50,000 social and affordable houses across the country.

That would more than double the expected 30,000 affordable homes the government has pledged to build out of its $10 billion Housing Australia Future Fund.

ACTU president Michele O’Neil said the PRRT had become a scam on the Australian people, arguing large companies were making a “killing” out of LNG and the public were seeing almost nothing in return.

She said Qatar taxed its gas exports at 46 per cent on top of its corporate tax rate, earning $38 billion in 2023, while Norway taxed oil exports at 56 per cent, with the revenue building its $1.8 trillion sovereign wealth fund.

“It’s past time for Australia to take the same sensible approach. The alternative is to keep giving away the resources owned by all Australians for peanuts to huge multinationals to make extreme profits,” she said.

“For every $100 of gas we export, we only collect 43 cents in tax on it.”

Data this week confirmed that the federal government is already 60,000 homes behind its target of building 1.2 million by the middle of 2029.

Labor overhauled the PRRT in its first term in office in a bid to bring forward payments of the tax, which can be delayed or eradicated by companies making legitimate deductions, such as the cost of constructing an LNG production plant.

Tax Office data this month revealed that total revenue fell in the first year of the revamped tax, although the Australian Taxation Office noted it would have been much lower but for the changes that increased the number of companies that paid the tax.

O’Neil said despite the changed arrangements, tax on $70 billion in revenue from LNG exports had collected just $300 million in PRRT revenue in the 2023-24 financial year.

One of the companies without a PRRT payment was Chevron Australia, which operates the enormous Gorgon and Wheatstone LNG projects in Western Australia.

But on Thursday, Chevron revealed that it made its first PRRT payments in August and expected to continue to pay the tax.

ACTU president Michele O’Neil says Australia is earning just 43 cents from every $100 of LNG exported from the country.

In the just completed calendar year, Chevron made $5.1 billion in tax payments, including income tax, royalties, excise, payroll tax and fringe benefits tax.

Company president Balaji Krishnamurthy said across a range of taxes, the company had paid more than $20 billion since 2009 while also spending $80 billion with joint venture partners on developing Gorgon and Wheatstone.

“For these benefits to continue to flow, ongoing development of Australia’s oil and gas resources is critical,” he said.

“Attracting this investment depends on a stable and predictable taxation framework which balances the significant business risk involved in developing major energy projects with the importance of delivering a fair return to Australians.”

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said the government should focus tax reform on ways that will lift business investment, which in turn would increase productivity.

He said extending and broadening the $20,000 instant asset write-off, which is available only to businesses with an annual turnover of less than $10 million a year, should be the government’s priority.

The write-off was discussed at this year’s economic roundtable, but the cost to the budget of extending it to all businesses effectively killed off the idea. But McKellar said the write-off would encourage firms to buy important capital goods that would improve efficiency and reduce costs.

“If we’re going to boost productivity, we need to get the ratio of capital to labour increased,” he said.

“The most immediate way to do that is an immediate asset write-off.”

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