Australia’s Gas Royalty Rort
Gas exports, royalty rip-offs, and profit rorts.
Australians have been told for years that increased gas exports mean increased royalties, so are good for the economy.
The truth is very different.
Australia has just overtaken Qatar as the world’s biggest gas producer. In 2016 Australia gas revenue was $22.7 billion with royalties of just $970 million. That same year, Qatar netted $27 billion in royalties.
The PRRT is levied on profit, not production, so producers reduce their profit as they do in other industries.
Investment analyst, Bruce Robinson, said the PRRT was a bad joke. It robbed Australia of gas dividends. Another analyst, Jason Ward, said the “fiscal regime” for Australia’s gas industry was one of the most generous in the world.
87% of Australia’s LNG projects are foreign owned. Multi nationals such as ExxonMobil, Chevron, and Shell, pay little in royalties or tax.
Mr. Ward said that the big LNG producers are paying almost nothing, but are among the largest exporters in the world. Mr. Ward proposed a change to Treasury in which $90 billion in 2027-2050 could be earned by making minor changes to the regime.
It was revealed earlier this year, that despite $13.3 Billion in earnings in 2017, ExxonMobil paid no tax. Profits were funneled out of the country via expensive loans made by corporate headquarters. Those were situated in low-tax jurisdictions.
There were further reports by ACIL Allen, that Ichthy’s LNG project in WA will export $195 billion, but would pay no tax or royalties over its lifetime.
Changes have long been called for, but successive federal governments have failed voters by allowing the rort to continue.
While royalties have been paid to states, they have been well below expectation. Similar rorts occur with other forms of mining, where minerals, such as coal and iron ore, net little or not benefit to the local economy.
The matter is exacerbated by high local gas prices resulting in high power prices.