Monique Ryan (Kooyong, Independent) Share this | Hansard source

The irony of Australia's nickname 'the lucky country' is more pronounced now than when Donald Horne coined that phrase more than 60 years ago. Australia is home to some of the most valuable natural resources and critical minerals on earth. We're one of the greatest and largest gas producers on the planet. The means for economic strength and prosperity lie beneath our soil and our seas. Yet, for all of that abundance, very little wealth from our extraordinary natural mineral and fossil fuel resources flows back to Australian people.

We saw that as recently as 2022, when the war in Ukraine began. Energy prices, including gas prices, surged. Windfall gains flowed into the pockets of gas companies both here and overseas. Companies exporting LNG reportedly made almost $100 billion in windfall profits in the three years following Russia's invasion of Ukraine.

Australian gas should belong to us all. Our government should have secured a significant return from that gas for all Australians, but instead those profits flowed to foreign investors and multinational companies like Santos, like Shell, like INPEX. Now, as we're confronted with another global energy crisis, we cannot let history repeat.

Donald Trump's war with Iran has quickly escalated into a regional conflict. Qatar usually produces 20 per cent of the world's LNG, but some of its gas fields have been so significantly damaged during this conflict that QatarEnergy has had to declare force majeure on its long-term contracts, meaning that that could affect international supply for up to five years. Energy markets are being impacted globally, and, at a time when energy and gas prices are rising domestically, it would be a profound shame were we to let Australians down again.

At the heart of this problem is the petroleum resource rent tax, the PRRT. When the parliament legislated the PRRT in 1988, the aim was to ensure that all Australians would enjoy a fair share of our collective wealth—a fair share of our national luck. The PRRT is targeted at economic rent—in other words, profits above the level reasonably required to maintain investment returns. But, instead, the PRRT allows companies to sell Australian gas with minimal tax while pocketing billions in public subsidies. The reality is that we collect less from the PRRT than we do from the beer excise and less from the PRRT than we collect from students in the repayment of their HECS, and WA drivers pay more in rego than west coast gas companies pay in royalties. Plainly, the PRRT is broken.

It was designed to place a 40 per cent tax on the excess profits from the exploration and extraction of oil and gas, but longstanding loopholes, generous uplift deductions and an overly complex design mean that the PRRT is not working for us. The formula is designed in a way that allows companies to understate the value of gas before liquefaction—in other words, to minimise their taxable amount while overstating the value created by the liquification process, which is then not taxed.

Deductions are another major problem. The PRRT allows capital expenses, like the enormous costs of offshore equipment and infrastructure, to be immediately deductible expenditure—in other words, a tax write-off. That means that companies can deduct massive project costs from their PRRT liability. And, if the expenses exceed revenue, the difference can be carried forward into future years. Many projects can accumulate deductions for years, sometimes decades, and can continue to report no taxable superprofits for PRRT purposes. As the Commonwealth Treasury put it in 2016, companies can defer the payment of PRRT indefinitely.

There is a reason why the ATO has labelled the oil and gas industry systemic nonpayers of tax. Essentially, the gas companies can use creative accounting—approaches which remain legal under our poorly designed resource rent tax—to make it look like they are not making superprofits even while they export vast quantities of Australian gas at enormous value.

We have tried to fix the PRRT. The government continues to point to changes it made in 2023 as having delivered a fairer return to the Australian community. But because uplifted deductions continue to suppress taxable profit, those changes delivered only $1.5 billion to our economy in 2023-24. Now more than ever, it is time for the government to act in the national interest and properly tax our gas exports.

We could start by urgently implementing a targeted windfall tax on supernormal profits generated from global crises such as wars. This could apply only when profits exceeded a defined threshold, and it could be limited to a period in which prices are unusually high due to these external price shocks. As a more permanent measure, we could consider the Superpower Institute's fair-share levy, a two-way tax on the net cash flows from the extraction, processing and sale of Australian gas. This could completely replace the PRRT. A fair-share levy would result in Australians sharing in a 50 per cent share of fossil fuel profits, which would be a marked improvement from the 18 per cent we share in now.

Had the government legislated the fair-share levy at the start of the Russian-Ukrainian war, Australia could have raised $27 billion—nearly 14 times as much as we have accumulated in that time from the PRRT. We could have used that revenue to completely relieve all young Australians of HECS debts, or we could have used it to increase the supply of Australian housing. If the government had placed a fair-share levy into the legislation before the start of the recent conflict in Iran, government revenue would have increased in the last four weeks by $1.6 billion. We could have raised more revenue in the last four weeks than we did last year from the PRRT.

Claims by the gas industry that fairer taxation will drive exporters and buyers away and chill investment ignore a basic economic reality: a tax on supernormal profits affects producers, not our foreign trading partners. And, under the fair-share levy, the government would share in investment costs as well as upside, meaning that there shouldn't be any lack of investment incentive or certainty. Introducing a fair-share levy would realise the original intention of the PRRT. As the name suggests, a fair-share levy would finally give Australians a fair share of our national resources.

Australians do want their fair share. A whopping 87 per cent agree or strongly agree that Australians deserve a better return from the sale of our gas exports. Three per cent of people disagree; who those people are escapes me. With another rate rise announced just last week and with fuel prices doubling in some places across the country, we can't ask Australians to foot the bill again while big gas companies are pocketing yet another enormous payday. Australians deserve their fair share on gas. As Donald Horne said, and I've abbreviated his quote: 'Australia is a lucky country, run mainly by people who share its luck. Most of its leaders so lack curiosity around the events that surround them that they are often taken by surprise by those events.'

Australians deserve better. They deserve a parliament that governs with vision, with imagination and with courage. They deserve a country that gets a fair share on its extraordinary natural mineral, oil and gas deposits. So I ask the government to take action on this issue as a matter of urgency for all Australians, to give us our fair share.

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