‘Lecturing’ teals and trolls should butt out on gas projects: NT chief

Kooyong independent Monique Ryan, whose questions in parliament have focused heavily on Middle Arm, accused the federal and NT governments of unleashing “a 1.4 million tonne carbon bomb that will accelerate climate change” and risk creating a “new ‘Cancer Alley’”.

Meanwhile, Dr Chalmers told The Australian Financial Review on Tuesday the government would stick to legislating changes to the PRRT announced in the budget.

“This does put pressure on the Coalition, in particular, to vote for our plan to get more revenue sooner from offshore LNG to help fund priorities like Medicare and bulk billing, or this cost-of-living help that we’re rolling out.

“The Senate has an opportunity to vote for more revenue sooner from offshore LNG, and it should take it.”

To pass its PRRT changes, which have not yet been tabled in parliament, Labor needs either the Coalition’s support or a combination of the Greens and at least two more crossbenchers.

Gas industry lobby group APPEA called for “bipartisan support” for the government’s changes, saying Australia needs “a strong and sustainable future for the gas industry”.

“New gas supply is critical and the government’s proposed PRRT changes provide greater certainty for industry to consider the future investment required to maintain both domestic and regional gas supply security for our customers,” said APPEA chief executive Samantha McCulloch.

“It is important to note the oil and gas industry contribution was growing considerably even before this extra $2.4 billion was proposed – with $16.2 billion in taxes, royalties and other charges forecast to flow to state and federal governments last financial year, up $10 billion on the previous year.”

Gas companies accepted Dr Chalmers’ announcement in the May budget to limit deductible expenditures allowed under the tax to 90 per cent of revenue.

The Greens and independents say Dr Chalmers should lower that cap to 80 per cent.

Five major offshore liquefied natural gas projects are subject to the potential change, led by Chevron’s $US54 billion ($80 billion) Gorgon and $US34 billion Wheatstone mega projects in WA, Japan-owned $US37 billion Ichthys off Darwin, Woodside’s $14 billion Pluto, and the $US12 billion Shell-led South Korean joint-venture Prelude.

The 40 per cent PRRT is levied on projects once they become cash-flow positive – which takes decades because massive capital costs are fully deductible upfront and indexed each year. The government’s capping of deductions at 90 per cent of annual income is designed to speed up tax payments.

Planned changes to the petroleum resource rent tax would not hurt the Woodside-operated NorthWest Shelf because the venture already pays other forms of taxes that do not apply to other major projects.

Dr Chalmers said the government chose its 90 per cent exemption cap “after a considered methodical and long process” that saw Treasury produce three options.

“We chose the Treasury recommendation that provided the most return sooner when it comes to offshore LNG, and that’s the design, that’s the policy that we intend to legislate,” he said.

Labor’s refusal to increase tax-take from the PRRT comes amid dual concerns about political fallout in WA and the negative impact on offshore investors, who bankrolled the bulk of the gas projects subject to the changes.

A series of ministers, including Resources Minister Madeleine King and Energy Minister Chris Bowen, have spearheaded a diplomatic blitz to calm nerves among major foreign gas buyers and investors in the region, but particularly in South Korea and Japan.

Dr Chalmers told parliament on Monday he wanted the industry to pay more tax sooner, “while protecting our international relationships and protecting the jobs in the sector and recognising that gas will play a role as a transition fuel as we embark on this net-zero transformation”.