25 November 2019 (IEEFA Australia): Australian company Telstra paid twenty times as much tax as all of the oil and gas companies in Australia despite having similar revenues according to the latest data provided by the Australian Taxation Office (ATO).
BG Group didn’t pay tax in 2016-17 nor did its parent Shell Australia
Companies working in Australia’s oil and gas industry paid just $81 million in tax in 2016-17, while Telstra with a comparative revenue of $26,948 million paid $1,644 million in tax.
Bruce Robertson, gas analyst with the Institute for Energy Economics and Financial Analysis (IEEFA) says Australia is short-changing its own pockets in favour of a dying industry.
“OIL AND LIQUEFIED NATURAL GAS (LNG) RESOURCES ARE NON-RENEWABLE FINITE RESOURCES THAT ARE DEPLETING DAY BY DAY,” says Robertson.
“Most countries in the world get significant taxation and royalties from their non-renewable oil and gas wealth. Given its large size, Australia does not. Most countries view taxation and royalties as a nation’s sovereign right to impose on any industry. Australia does not. And many countries divert a portion of their oil and gas royalties to a sovereign wealth fund to supply future national needs. Australia, again inexplicably, does not do this.”
In a submission to the federal government’s senate enquiry into Australia’s oil and gas industry, Robertson highlights the disappointing and in many cases zero tax and royalty revenues received while domestic gas consumers continue to pay higher than international prices for Australian exported gas.
Royalty rates have been so low the Queensland government increased the rate
“Catherine Tanner, the Chief Executive Officer of BG Group promised around $1 billion a year in taxes and $300 million a year in royalties for its petroleum project in Queensland,” says Robertson.
“The reality is BG Group paid no tax in 2016-17 nor did its parent Shell Australia, a far cry from the $1 billion touted by Ms Tanna in 2010 for BG group alone. Ms Tanner is now on the Board of the Reserve Bank of Australia.
“Royalty rates have in fact been so low that the Queensland government increased the rate, although the amount received is still a fraction of what’s expected.”
ROBERTSON SAYS THE OFFSHORE OIL INDUSTRY IS NOT DOING ANY BETTER.
$195 billion of Australia’s natural wealth is being exported with $0.00 royalties or PRRT being collected.
It was reported in 2017 that “the Inpex-led Ichthys LNG project will export $195 billion of LNG, liquefied petroleum gas (LPG) and condensate from Darwin in the Northern Territory over the next three decades but will not pay the Australian government anything for the gas it extracts from its field 450km north of Broome in Western Australia.”
IEEFA notes $195 billion of Australia’s natural wealth is being exported with $0.00 royalties or royalty-type petroleum resource rent taxes (PRRT) being collected.
“This is a lamentable situation,” says Robertson. “Australia is literally giving away its natural wealth.
“There is so much that can be done to fix this situation. All it requires is a small amount of political will.”
Read IEEFA’s submission to the Senate Committee (No.29), including recommendations: Australia’s Oil and Gas Reserves Submission to the Senate Inquiry: Arrangements used by other countries to maximise the benefit to the public of national oil and gas reserves
Media Contact: Kate Finlayson ([email protected]) +61 418 254 237
Author Contact: Bruce Robertson ([email protected])
About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.