Gas Royalties For Our Nation
November 15, 2017
Speech delivered by Senator Georgiou to the Senate on the evening of November 14, 2017
A few weeks ago Pauline Hanson and I launched a new gas policy in Perth which was aimed at benefitting Australians and ensuring that as a nation we get full value for the sale of our off-shore gas.
This all came about because after becoming a Senator back in March, I was shocked to learn that neither major political party had been willing to address the generous taxation regime which has resulted in Australians paying foreign-owned multinationals, to take our gas and never pay for it.
Before I go on, I do want to acknowledge that there is a lot of heavy investment in setting up shop. I know INPEX for example which is Japanese owned, has invested billions of dollars in WA and in Darwin to produce a gas project which has a 40-year life-span. That’s all well and good and there have been thousands of jobs created in the construction phase.
But this is where the situation for me gets ridiculous…and I’m referring to the way oil and gas companies are allowed to treat expenses when calculating their profits.
Next time you see your gas or electricity bill just remember this Government allows petroleum companies to claim MORE in
expenses, than they actually paid, which in effect represents a subsidy by taxpayers.
Let me explain, these gas giants are able to claim 18% more than what they pay for goods and services in the first year when calculating their income tax.
If they don’t make a claim, then the expense of the previous year compounds at 18% year upon year until its offset against income derived from production.
But here’s the kicker Mr Speaker….a clutch of gas companies represented by the Australian Petroleum Production and Exploration Association (APPEA) are sitting on 250 billion dollars of Australian tax credits which means that these multinational companies will NEVER pay income tax on the profits they make.
The companies will however make billions of dollars from our gas which will find its way possibly to a tax haven and their shareholders.
The Reserve Bank has suggested Australians buy shares in these companies if they want to benefit from Australian gas.
One Nation has proposed changes to the tax regime which would see gas companies pay something for our gas but these companies want to pay nothing and are prepared to spend big to destroy anyone who suggests Australians should get something for their natural resources.
Mining companies paid WA 39 billion dollars over the past decade…So what is wrong with One Nation wanting payment for its gas off the coast of Western Australia?
One Nation proposes a uniform royalty of 10% on the well head value of gas which means these companies pay something for the gas they take. This proposal is vigorously opposed by the companies and their peak –body, APPEA which has accused One Nation of having anti energy policies.
APPEA says a federal royalty like the one on the North West shelf is a bad idea and comes at the worst possible time and will raise less tax than the Petroleum Resource Rent Tax (PRRT).
Only gas projects on the North West Shelf pays a royalty, all the other fields pay nothing.
I understand multinational gas companies would like to pay nothing for the gas they take and pay nothing on the profits they make selling our gas but it is not fair to Australians.
The Budget papers show that in 2017/18 the Government expects to receive 800 million in tax for oil and gas but most of this tax related to the waters off Victoria and is paid by BHP.
Nothing is being paid for the gas taken off the coast of WA (other than the North West Shelf) which makes us the biggest exporter of LNG in the world.
The gas companies are unwilling to consider paying for our gas and want to discredit One Nation for suggesting they pay more than nothing.
In addition to royalties One nation wants a ‘use it or lose it’ policy apply to proven gas reserves, but companies with leases as old as 30 years say they want to hold onto them, for as long as they want. The effect is to limit supply and drive up gas prices which is what they accuse One Nation of doing.
Our use it or lose it policy would see more gas on the market and prices fall.
Let’s be clear and call out the elephant in the room….Australia faces a crisis because we do not have internationally competitive gas prices in the Eastern States.
This problem could be overcome with a pipeline from West to East or by shipping LNG to the east coast and then re-gassing it and putting it into the eastern states grid. AGL have already announced they are looking at a floating re-gassing platform in Victoria.
We have abundant conventional gas off the coast of Western Australia and we have a right to benefit from it.
Other countries have negotiated much better deals with multinational gas companies and it is not too late for us to get paid for our gas.
APPEA can huff and puff all it likes but One Nation is not giving in to their tactics.
One Nation cannot be bought and that presents a real problem for APPEA because it has worked so well with the major parties.