🤷 What happened: Last week One Nation Leader Pauline Hanson unveiled her party’s new gas tax policy, which would see taxpayers take on some of the risk of developing new gas projects.
📑 The policy: The cornerstone of Hanson's policy is a 30 percent rebate for “genuine” oil and gas exploration in Commonwealth waters, while giving the federal government the option to buy up to 30 percent equity stake in any production licence.
Australia earns revenue from gas exports in three key ways: the Petroleum Resource Rent Tax (or PRRT), corporate tax and royalties. Critics say the current system is not delivering value to Australian taxpayers.
One Nation would replace the PRRT with a new royalty, but only for new projects. Existing projects would stay with the current system.
Hanson hasn’t given a figure for the new royalty, but it has been reported that her tax rate on gas exports would be 10 percent.
One Nation previously backed a 25 percent tax on gas exports. Josh Runciman, Lead Analyst for Australian Gas at the Institute for Energy Economics and Financial Analysis, said the shift to this new policy is a “step back” for the party.
🔭 Exploration: He said when it comes to exploration the gas industry generally looks at the best options first and then works its way to less attractive alternatives.
According to Runciman, a lot of Australia’s gas projects are already operating in our most abundant reserves, meaning new projects subsidised under Hanson’s policy would carry greater financial risk.
“The idea that taxpayers are on the hook or exposed to risk for funding exploration activity in those less prospective basins, that's a bit of a red flag for taxpayers.”
Runciman said the government was not well placed to determine which exploration activity made sense financially.
“So what we effectively have is a transfer of risk onto taxpayers, where taxpayers have absolutely no ability to understand that risk or to manage it,” he said.
💰 Tax return: Runciman preferred a national policy model used by Queensland to tax its onshore gas and coal.
“If gas prices are really low, government takes a small amount,” he said. “As gas prices get really high, government takes a larger share. So it's very similar to how income taxes work.”
He said this model had earned Queensland hundreds of millions of dollars each year.
Runciman argued the Queensland model beat a flat 25 percent export tax, which has largely been spruiked by the Australia Institute, the Australian Council of Trade Unions, the Greens and some independents MPs, as it protected the industry when prices were low but made them pay during price spikes.
Thumbnail: AAP