The science is clear: we need to keep oil and gas in the ground in order to have a chance at limiting global warming to 1.5 degrees. Gas and oil companies pay no royalties, no taxes, create very few jobs, yet they have a complete stranglehold over the Liberal and Labor parties.
Liberal and Labor governments at all levels across Australia continue to support and give handouts to open up new oil and gas reserves. The 2021–22 Budget contained over $51 billion in coal, oil and gas subsidies.
Offshore gas companies get our gas for free thanks to Australia's generous tax system. The Petroleum Resource Rent Tax (PRRT) is the most egregious rort in the Australian tax code.
The fundamental flaw with the PRRT is the overly generous uplift rates applied to carried-forward expenditure which is used to offset taxable income. Most problematic are exploration expenses which compound at 15 per cent above the long-term bond rate, and can be transferred from one project to another within a company. While these rates have been revised downward for future gas projects, the great boom in liquified natural gas (LNG) construction over the past decade won't pay any tax and will shift these profits offshore, tax free.
Successive Liberal and Labor governments' failure to address this problem results in oil and gas companies accumulating billions in tax offsets every year. The Australian Tax Office has named gas companies 'systemic non-payers of tax'. Despite Australia's gas exporters earning more than $50 billion in exports, the Tax Office expects that no significant revenue will be paid under the existing tax system until the mid-2030s, a decade later than expected. Last year, Shell admitted it would never pay PRRT on its 25 per cent share of the Gorgon project.
Qatar and Australia export the most LNG in the world. While we export around the same amount of gas, Qatar raises $20 billion a year in gas taxes, while Australia earned just $0.88 billion from gas companies last year.
There are numerous improvements that could be made to the PRRT that would result in a better distribution to the public of the profits being made by multinational oil and gas companies from extraction of Commonwealth resources. Yet, as the majority report shows, the Liberal and Labor parties continue to tinker at the edges and allow some of the most polluting, biggest tax-dodging companies on the planet to starve the public of a fair take that could pay for bringing dental and mental health into Medicare and finance new jobs and industries in clean energy exports.
The mining and burning of coal, oil and gas is responsible for a large proportion of Australia's greenhouse gas pollution. If the 114 currently proposed coal, oil, and gas projects are allowed to continue, they will emit pollution equivalent to 2.5 times Australia's annual carbon emissions.
While current accounting rules allow these big corporations to wash their hands of accountability for these emissions, the climate does not care which country the pollution is burned in. Every country, and every part of the fossil supply chain, must do its part to end the use of fossil fuels.
Big oil and gas corporations need to pay for the damage they cause to people and the environment.
The Australian Greens believe the recommendations made in the majority report will not reduce Australia's emissions and they strongly reject the role of blue hydrogen in the transition towards net zero emissions.
Recommendation
That the Australian Government:
phase out of coal and gas by 2035;
adopt 75 per cent emissions reduction by 2030, and net-zero emissions reduction by 2035;
end all public subsidies of coal, oil and gas;
introduce a 10 per cent Commonwealth royalty for gas extraction, creditable against the PRRT; and
implement a long-term solution to ensure industry covers the full cost of offshore decommissioning, informed by overseas models that are underpinned by transparency and accountability.
Senator Dorinda Cox
Member
Greens Senator for Western Australia