Independent senator David Pocock has described the Petroleum Resource Rent Tax (PRRT) as a "national scandal", as new research claims to show the oil and gas industry contributes the equivalent of the value of the Pharmaceutical Benefits Scheme to the Australian economy.
Despite the headline figure of "$21.9 billion in taxes and royalties to be delivered to governments in 2024–25" spruiked today by the sector's peak body, Australian Energy Producers, Pocock is unimpressed.
Speaking exclusively to ENB, the senator said at a recent tax roundtable convened by Allegra Spender MP, the consensus among the economists and tax experts present was the need to strengthen the PRRT.
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"The PRRT is failing to deliver a fair return to Australians from the sale of our gas. Excessively generous deductions and flawed transfer pricing rules have allowed some of the world's most profitable gas companies to pay next to nothing in taxes from offshore projects in Commonwealth waters.
"The gas industry's own research shows that returns from the PRRT are small and shrinking despite changes introduced by the Albanese Government and passed with the support of the Greens.
"This should be a national scandal. We're selling off publicly owned resources for bargain prices, and the benefits are flowing offshore while Australians miss out," said Pocock.
The ACT senator's fiery comments came off the back of the latest financial survey by AEP shows the industry's contribution—up from $21.5 billion last year—includes company income tax, the Petroleum Resource Rent Tax (PRRT), royalties and excise.
"The oil and gas industry remains the second-highest corporate taxpayer in Australia, accounting for one in every ten company tax dollars paid," said AEP CEO Samantha McCulloch.
"$22 billion in tax revenue helps fund essential services for all Australians and is equivalent to the total annual cost of the Pharmaceutical Benefits Scheme."
In addition to nearly $60 billion in taxes and royalties paid over the past three years, the oil and gas sector remains a major engine of economic growth, contributing 3.7% to Australia's $2.6 trillion GDP in 2023, according to Australian Energy Producers.
Economic analysis by KPMG found the oil and gas sector is the most productive in Australia, with each worker producing $2.8 million of gross value-added in 2021-22 (16 times the Australian average).
"As well as having a critical role in Australia's energy mix, natural gas is powering the Australian economy through high levels of employment and productivity, contributing $105 billion a year to the national economy and supporting 215,000 jobs," McCulloch said.
"For an industry characterised by long lead times, high upfront costs, and intense international competition for capital, sound and stable tax and regulatory settings are essential to provide investors and operators with confidence to invest in large-scale projects that can span several decades."
Pocock's comments today are not the first time he's let rip on PRRT which he has previously called a rort and "a scam on Australians."
"I'm concerned that lobbying by the gas industry has shaped government decision-making behind closed doors, without transparency or scrutiny. It's a clear example of how our broken lobbying rules are undermining public trust in the ability of Government to deliver the reforms needed to address the huge challenges we face.
"Australians are fed up. More than 5,600 people have signed my petition calling for urgent reform to ensure we finally get a fair deal on our gas," he said today.
Sen Pocock's comments came to ENB late in the day. We have offered AEP the chance to address his views and will update this article accordingly.
