Labor has been accused of “lowball” in its plans to collect billions of dollars from gas producers by bringing forward a major industry tax.
Crossbench MPs have said the Albanian government should have taken a harder line after announcing it would increase revenues from the rental tax on petroleum resources by $2.4 billion over the next four years.
The government plans to introduce a 90 percent limit on the use of deductions that can be settled under the PRRT from July 1.
The changes, which have been under consideration since 2019, would result in large liquefied natural gas projects paying PRRT about a decade earlier than they otherwise would have.
Several teal independents, the Greens and crossbench Senator David Pocock have reacted with some dismay after Jim Chalmers announced the PRRT reform this weekend.
Independent Mackellar MP Sophie Scamps called the reforms a “positive step” that overall was still “small and timid” as LNG exports were worth more than $90 billion annually.
“The fact that the changes have been received so enthusiastically by the oil and gas lobby group, the Australian Petroleum Production & Exploration Association (APPEA), is an alarming signal,” she said Monday.
“The changes announced by the Treasurer today will only add $600 million per year in PRRT revenue.”
Fellow crossbencher Zoe Daniel echoed Dr. Scamps and said keeping an increase in revenue from the PRRT “down low” was a “missed opportunity”.
“These are Australian resources, and this is a weak step towards a fair return,” the Goldstein MP said.
Ms Daniel said Australians earned a larger share of the profits made by gas producers as a result of the war in Ukraine, which has driven up commodity prices as countries stop using Russian coal and gas.
“This is free money that they could never have factored into their business or investment plans,” she said.
“Woodside, for example, posted a record $9.65 billion after-tax profit in the past fiscal year.”
Under the proposed changes to the PRRT, gas companies would still be able to claim tax deductions on investments for new projects, but they would be capped at 90 percent of their taxable income.
Greens spokesman Nick McKim called the proposal “less than the bare minimum” and claimed the changes were “designed by the gas industry”.
“Under the changes proposed by Labor, the more profit gas companies make, the less extra tax they pay,” said Senator McKim.
The treasurer countered criticism of the changes, saying the government needed to work closely with the gas industry to “strike the right balance” between increasing revenues and bolstering investor confidence.
“We consulted with them to find out how we could get more income for Australians from their resources more quickly, to help fund our living expenses package and other priorities within a budget,” said Dr. Chalmers to ABC Radio.
“But in a way that recognizes that we want to see investment, we want to see supply, and we want to make sure we meet our international commitments.”
The government has urged the opposition to support the PRRT changes, saying that if the coalition does not get involved it will be forced to negotiate with the Greens in the upper house.
Anthony Albanese said the Liberals and Nationals should support the changes the gas companies have given and APPEA had both said they “can live with” the reforms.
The prime minister admitted the reforms were “modest” but said the government wanted to support the gas industry.
Liberal frontbencher Dan Tehan said the opposition could support the reforms.
“Obviously higher taxes are not in our DNA, but we will consider it,” he told Sky News on Monday.
“We have to consider it wisely, examine it on its merits, of course have the consultation with the industry and then we will make a decision on it.”
Limiting the share of PRRT-assessable revenue on LNG projects was one of the key recommendations of a Treasury review of gas transfer prices released by the government on Sunday.
The government will implement eight of the eleven recommendations of the Treasury review, as well as eight recommendations of the earlier Callaghan review of the PRRT, which the Morison administration accepted but did not implement.