Greens want Labor’s gas tax doubled

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.

The Greens’ offer is likely to be dismissed by Dr Chalmers, who will be wary of damaging Labor’s political stocks in WA, where wins in last year’s election ensured Anthony Albanese’s victory, and where more recently polling suggests support has softened.

The government has also been forced into a major diplomatic offensive to calm jitters among Australia’s biggest gas buyers, particularly in South Korea and Japan, where alarm is most acute over a series of interventions by Labor into the gas industry, including last year’s price cap and the industrial carbon price reforms known as the safeguard mechanism.

Dr Chalmers told parliament in response to a question from Victorian independent Monique Ryan that he wanted to “see the offshore LNG industry pay more tax sooner”.

“We’ve come up with the way, with the help of the Treasury and on the recommendations of the Treasury, to ensure that we can do that 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,” he said.

Any knockback by Labor of the crossbench offer is set to deepen the emerging sense of gridlock that is emerging in parliament over critical issues including Labor’s stalled public housing policy.

Opposition Leader Peter Dutton in late May signalled the Coalition would work with Labor to pass the PRRT changes so long as the government streamlines approvals of future gas projects.

‘Simple choice’

“The ball is now in the government’s court,” said Greens leader Adam Bandt.

“They can work with the Coalition to weaken environmental protections to fast track gas projects, or they can get this legislation through with the Greens and crossbench if they increase their minuscule tax take. It should be a simple choice.”

The Greens said the five gas projects were sitting on $277 billion in tax credits that could be used to offset their PRRT liabilities.

“These gas companies are sitting on a pile of avoided tax credits that is greater than the entire GDP of New Zealand,” Mr Bandt said.

“They can afford to pay a little bit of tax while the rest of the country struggles through a cost of living crisis that gas companies are profiteering from.”

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.

“What we’re proposing with the Greens and David Pocock isn’t a radical measure,” said Ms Tyrrell, from the Jacqui Lambie Network. “It’s raising a few extra billion over the next four years. It’s collecting money we were already going to collect, just sooner.

“It isn’t going to kill any jobs or shut down any projects.

“Labor’s had one path to pass its PRRT changes, but the Coalition were asking for a pound of flesh.

“We’re not asking for that: we’re asking for hospitals to be paid sooner rather than later.”

The government in May announced that it had chosen to implement so-called “option 1c” of a series of Treasury department recommendations on how to lift tax collected via the PRRT. That decision effectively rejected two alternatives proposed by the department.

Mr Pocock confirmed he would vote no to the government’s legislation unless it backed the Greens’ proposal.

However, the ACT senator told The Australian Financial Review that his preferred reform would be to lift the rate at which super profits are taxed under the PRRT to 50 per cent or 60 per cent from the current 40 per cent.

Labor’s changes, which apply to the use of deductions that reduce the amounts payable under the PRRT, amount to “window dressing”, he said, and effectively only bring forward future revenues without ensuring “additional” revenue.

“We’ve now learnt that the government was provided options from Treasury, and they didn’t go with the preferred one and went for essentially the weakest option. It just doesn’t make sense.”