The Greens-led Select Committee into the taxation of Australia's gas resources has tabled its final report, agreeing that the gas export tax regime should be revisited in light of recent global instability following conflict in the Middle East.
However, the committee did not reach agreement on whether changes to the current regime are required, including the proposed introduction of a 25 per cent export tax. Any such recommendation required the support of Labor or Liberal members to be included in the final report.
As a result, the report does not include a majority position on reform to the gas tax system.
Despite this, evidence to the inquiry directly contradicts claims from the gas industry and the Prime Minister that an export tax would increase prices for overseas buyers. Submissions and testimony from Treasury, economists, and gas companies themselves indicate that the cost of such a tax would largely be borne by Australian producers rather than overseas customers, given the structure of long-term contracts and global pricing arrangements.
The committee report omits these key findings as well as any detail of evidence provided by witnesses and submissions. This material has instead been set out in the Chair's additional comments, which highlight the significant body of expert and community evidence supporting a minimum 25 per cent export tax.
The report is tabled just days ahead of the May Budget.
As put by the Chair of the select committee, Senator Steph Hodgins-May:
"This inquiry shows Labor knows this issue isn't going away, but still refuses to address the problem that Australians are not getting a fair share of our resources.
"Labor is desperate to kick the can down the road, but the massive national momentum for a gas tax is clearly making them nervous.
"Labor has a choice in this budget: tax the gas corporations to pay for things we all rely on like the NDIS, or forge ahead with brutal cuts while the gas corporations get Australian gas for free and make obscene war time profits.
"If Labor fails to tax the gas corporations in this budget, it will be clear who they're really working for.
"Labor clearly knows something needs to change, but they're not brave enough to do it now, and not in a way that challenges gas company profits.
"The cowards in Labor will not even agree that we need a way to get our fair share back from these gas companies. That tells you everything about the grip the gas lobby has over this government.
"The Prime Minister is out of step with his own backbench, Labor's own members, he is out of step with the public, and repeating arguments that come straight from the gas industry playbook.
"Pointing to conflict overseas is a convenient excuse to delay action while billions in gas profits continue to flow offshore, but we heard from Treasury, economists and even gas companies: the cost of an export tax would come out of gas company profits, not from our trading partners.
"The experience in high-taxing jurisdictions like Norway is not that gas companies and trading partners flee. Those companies stay, but the public actually gets a fair share for their resources.
"The Prime Minister is echoing the gas industry's scare campaign on trade and stability, despite the evidence saying otherwise.
"Gas companies talk about protecting investment but what they mean is protecting their profits. A gas export tax would do exactly what they fear, cut into those profits and deliver a fair return to the public.
"While households and businesses are under huge pressure, gas companies and their U.S shareholders are laughing all the way to the bank and cashing in on free gas that should be owned by all Australians.
"The longer this government delays, the longer Australians miss out. Australians expect and deserve a fair return and this fight is far from over."
Links:
Australian Greens Additional Comments
Excerpts from Hansard and answers to Questions on Notice:
Dr Ken Henry: overwhelmingly the incidence falls on those who are the shareholders, really, of multinational companies. That's where the incidence would fall. Australia is a major gas exporter but is not a big influencer of the world price of gas.
Origin Energy: In general, we would have to absorb those costs, and our customers, both domestic customers and international customers, purchase the gas under long-term arrangements
INPEX: INPEX's long-term LNG sale and purchase agreements do not allow us to renegotiate due to a tax or royalty change.
Treasury: I think a lot of the exports are underpinned by either long term contracts where prices are relatively well established or spot sales to markets where essentially it's a global market price which has been set so both of those factors would seem to suggest that the economic burden of any tax change would be more likely to fall on the producers.
