The Point Live: Woodside, Chevron, Santos and INPEX appear before Senate inquiry into taxing gas, sitting in Perth

Thanks for following our rolling coverage of the Senate gas tax inquiry.

Santos will give evidence this evening. For coverage of that and more analysis, keep an eye on The Point over the weekend.

Have a good one!

Straight up, Senator Hodgkins-May asks INPEX about Australia Institute research showing that Japan’s government raises more money from Australian gas exports than Australia’s government does.

INPEX saw the research and estimates that INPEX pays $7 million out of our estimate of $700m per year that Japan’s Petroleum and Coal Tax raises from  exports of Australian gas.

Despite seeming to confirm our numbers and disclosing INPEX’s share, the INPEX exec doesn’t agree with the central point – that Japan gets more money from Aus gas exports than the Aus gov does.

There’s a kerfuffle around process and they take it on notice.

With INPEX now appearing before the Senate Committee, this seems like relevant content from last year:

The AFR under the former editor Michael Stutchbury very much disliked The Australia Institute.

So, I’m not surprised he thinks the idea of a 25% tax on gas exports is bad.

But I would never have thought it was because if… errr Gina Rhinehart!

Stutchbury writes:

“Australia Institute-style misinformation claims that the gas companies have plundered the nation’s gas for free. Yet, the Labor-designed Petroleum Resource Rent Tax sensibly starts off low before ramping up high. After paying off their massive capex, gas exporters are heading into several decades of close to a 70 per cent profits tax.”

Errr sorry Michael, but the getting gas for free aspect relates to how INPEX and others (56% of the gas exported) pay no royalties.

Here’s the thing about Gina Rinehart and her iron ore – she has to pay royalties for every gram of iron ore her company gets out of the ground – it is rather odd that people like Stutchbury can’t grasp that we think the same should apply for gas.

I forgot when Woodside was on to have a check of how their share price has gone since the start of the Iran War.

And with Santos not on for a few more hours, I’ll also have a check at theirs as well.

Seems they’re doing ok

Under the heading “We provide energy security to Australia and Japan”, the INPEX submission has this:

INPEX continues to provide emergency domestic gas to the Northern Territory from Ichthys LNG, helping to maintain energy reliability and “keeping the lights on in Darwin.”

While Australia plays a critical role in supplying reliable LNG to regional partners including Japan and Taiwan, Australia is also dependent on these same partners for the secure supply of imported liquid fuels. 

Maintaining settings that support continued LNG investment in Australia is therefore essential—not only to Australia’s role as a trusted energy supplier, but also to safeguarding Australia’s own liquid fuel security through these reciprocal and longstanding energy relationships.

Funnily enough, the “keeping the lights on in Darwin” is quoting their own CEO during an inquiry into the Middle Arm project in 2024, “We have a project development agreement with the Northern Territory government that was signed in 2009. Part of that project development agreement sets out emergency gas supply for the territory if and when they need it. Our commitment as a company is to keeping the lights on in Darwin.”

So here are a few questions

1. If this is part of a written agreement with the Northern Territory, why is it relevant to a 25% tax on gas exports?

2. Are they now saying that the commitment to keep the lights on in Darwin is under threat if gas exports are taxed?

3. IS this a threat from INPEX that they’ll only contribute to our fuel security if Australia doesn’t tax our gas exports?

Senator Fatima Payman just asked “Why are Australians struggling with a cost of living crisis while gas companies are making billions out of resources that Australians own?”

Great question and the answer from AEP was really interesting: “I would point you to the fact that prices on the east coast are at the lowest they’ve been in many years”.

That’s true…but why? Well, the answer came a week or two ago in The Australian:

“Gladstone LNG says it’s forgoing lucrative export opportunities to avoid ‘suicide’ confrontation with the Albanese government over domestic gas prices.”

Here’s an extended quote:

Santos-backed Gladstone LNG is forgoing lucrative export opportunities as global prices surge, opting instead to limit output rather than risk driving up domestic gas prices and inviting a confrontation with the Albanese government.

The decision highlights how the threat of intervention is already influencing behaviour before any formal Labor reservation policy takes effect.

Gladstone LNG chief executive Stephen Harty delivered the blunt assessment on Tuesday, underscoring the political and commercial tightrope facing producers.

“If we were as brazen as we’ve been accused of, we would be buying up every last molecule we could and putting it on boats and making a truckload,” said Mr Harty said.

Asked why GLNG was not at full capacity, Mr Harty said: “Because that would be suicide.”

“Doing that, there is no doubt that there would be very serious repercussions from a political point of view,” he told a gas conference.

The reason gas prices are low is BECAUSE OF THIS INQUIRY!!!

If it wasn’t for the political pressure that Senator Payman and colleagues are putting on the gas industry, they would be getting “every last molecule they could and putting it on boats and making a truckload”.

New Australia Institute research published today shows that the Japanese Government makes more revenue taxing its imports of Australian gas than the Australian Government makes from the export of our gas.

Key findings:

• Japan has imposed a tax on oil and gas imports since 1978, expanding the tax to cover coal in 2003.
• Over the last five years, Japan’s energy import tax has delivered an average of AUD $8 billion per year to the Japanese Government.
• On average, every year, $1.8 billion of Japan’s energy import tax comes from gas imports, substantially more than the $1.4 billion raised by the Australian Government’s Petroleum Resource Rent Tax (PRRT).

“It’s hard to believe how badly Australians have been ripped off by gas export companies,” said Dr Richard Denniss, co-CEO of the Australia Institute.

“Japan, a country with no gas, oil or coal reserves of its own collected almost $40 billion over the last five years while the Australian PRRT provided only $7 billion to Australians.

“Not only has Australia been literally giving more than half of the gas we export away for free, we now learn that the same Japanese Government that is opposed to us putting a tax on our gas and coal exports, has been raking in billions of dollars per year via their own tax on gas and coal imports.

“The Australian Government recently cut our petrol excise to help Australians in the middle of a cost-of-living crisis. If the Japanese are so worried about the cost of Australian gas and coal, they should scrap the taxes they are imposing on it.

“To add insult to insult to injury, the Japanese Government’s rationale for introducing their tax on imported energy back in 1978 was to help Japan improve its energy security after the OPEC oil shocks. Thanks to their tax on our energy exports, the Japanese have 90 days of liquid fuel stored in case of the kind of emergency we are now in.

“Australians have been taken for mugs by the gas export industry. And while successive Australian governments have been responsible for causing this mess, it is the Albanese Government that is responsible for fixing it.

“Australia Institute research shows if Labor had introduced a 25% export tax back in 2022, we would have collected $69 billion by now, and every week we delay introducing such a tax is costing us $350 million.

“The longer we delay, the bigger our public debt will be.”

Taxing gas in Australia and Japan

Full report

INPEX is up next.

INPEX is a wholly Japanese owned company and part owned by the Japanese government.

It has never paid any PRRT.

And it doesn’t pay much other tax either.

A couple years ago Matt Grudnoff and I appeared at another Senate committee which also had Samantha McCulloch appearing.

She told the Senate committee then that we shouldn’t even really count the LNG exported from Queensland as part of Australia’s gas supply because “that gas was produced in large part because of plans to access the export market. Essentially, it wouldn’t have been produced without that export market there”.

All the industry wants to do is to drill for more gas and export it overseas for massive profits.

Australians deserve a fair return for profits made from our natural resources. Once they are gone, we don’t get another chance.

When exports rise, Australians should expect to receive more tax revenue – this is what happens in Norway, Qatar and other oil and gas exporting nations. 

But in Australia, as LNG exports have soared, the Petroleum Resources Rent Tax has actually fallen. That’s because the PRRT was not designed to deal with LNG exports but oil and gas in the Bass Strait.

The gas industry can complain all it likes, but Australians know they deserve better. A 25 per cent tax on gas exports would finally deliver a fair return to Australians for our resources.

Senator Payman: Does Chevron accept that Norway and Qatar have been able to generate revenue that Australia has not?

Chevron: Waffle and mansplain.

Here’s the chart. Qatar and Australia export the same amount of gas. Qatar gets 5x more money.

AEP’s CEO is suggesting that our social media posts contain lies, and that their adverts are just “an education campaign”.

Our social media posts that they hate most is that beer drinkers in Australians pay more tax in excise than gas companies pay in PRRT

That is not a lie; that is the absolute truth and it is in the Budget Papers.

So if they think it is a l maybe they should have a chat to the Treasury Department and tell them that their numbers are wrong…

But let’s have a look at AEP’s “education campaign”. Sur would hope there are no lies in it…

One of its Facebook adverts says that the suggestion Australia gets a pittance for its gas compared to Norway and Qatar is a LIE.

Gee a “Lie”… hmm let’s put that through the fact checker…

Claim: Australia gets a pittance for its gas compared to Norway and Qatar.

Verdict: The claim is true. AEP’s lie detector must be faulty.

Let’s compare Norway and Australia.

Australia’s gas industry revenue has exploded while its contribution to government revenue has remained stubbornly flat, only ticking up slightly in recent years as the scale of the industry’s massive profits meant that the industry couldn’t entirely dodge taxes. Meanwhile, when Norway’s petroleum industry booms, so do Norwegian government revenues.

Qatar similarly has also not allowed multinational gas companies to take the piss. While Qatar and Australia export a similar value of LNG, Qatar raises around five times more government revenue from these exports.

The gas lobby likes to point out differences between Australia’s system and those in Norway and Qatar; this is a distraction technique and ignores that Australian governments already assist gas companies in various ways. More importantly, the idea that the gas industry wouldn’t mind shifting to a tax system like Norway’s is laughable, as mentioned by Skye Predavec earlier today, the gas industry was not at all happy with the creation of Norway’s system and lobbied hard against its creation.

In the words of Jens Stoltenberg, Norway’s finance minister:

we invite foreign companies to invest, to produce, and then, of course, they can sell the oil and gas. But partly, we taxed them quite heavily. It’s 78% tax rate. And they told us that was impossible, but they come and invest. [LAUGHTER] And we taxed them, and they stay, because they earn money even with a tax rate of 78%

So, sorry AEP, we’re quite happy with the standards of our advertising, maybe you might like to reflect upon your own….

David Pocock lands another couple of blows on Chevron:

Pocock: How much gas did Chevron sell before its first PRRT payment?

Chevron: waffle, waffle. We’ll have to take it on notice.

Pocock: How much gas do your facilities use for their own operations

Chevron: We’ll have to take it on notice

Pocock: Do you have to pay for that gas?

Chevron: There’s investment required for that part of the project, but its small.

Pocock: It’s a small part of your project, but we know that the gas you use for processing is more than the gas all Australian households use. That gas that you use in your facilities is Australian gas and you don’t have to pay a single cent for that gas…just whatever it costs you to run those facilities?

Chevron: Again Senator, back to the significant investment we’ve made to access that gas.

Pocock: Nah, I get the significant investment, but I’m talking about the actual gigajoules of gas. What I’m hearing is that you don’t have to pay for that, just because you’ve invested in tapping it.

Chevron: Waffle, waffle, we pay to operate and maintain our facilities.

Pocock: I get that. …for you it’s a small amount, but actually its quite a lot of gas to run your operations. That gas you don’t pay a cent to the commonwealth for.

Chevron: That gas, Senator, is part of our operations, its small part. It’s a small thing relative to the LNG we’re generating, the export revenue…at the end of the day, we’re a gas business. Waffle.

Pocock: Just to hone in on the gas that you’re using to power your facilities. You may say it’s a small amount. Can you just confirm that you get that gas for free.

Chevron: We get that gas exactly the same way we get all the other gas

Pocock: How do you pay for it.

Chevron: Through the investment we make….

Pocock: That’s not paying for Australian gas. That’s paying to set up your facility.

Such a good point. Bakers don’t get their flour for free. Farmers don’t get their water for free. Gas exporters get their gas for free.

So AEP leads off by saying the gas industry supports 215,000 jobs.

Alas that is bullshit as Skye Predavec has already analysed

You might think from their claim that the gas industry directly employs 215,000 Australians – but this couldn’t be further from the truth.

According to the most recent official data, oil and gas (both extraction and supply) employs less than 39,000 people. That’s less than 0.3% of all of Australia’s jobs.

To put that in perspective, retailer Bunnings Warehouse employs over 55,000 people. And far more Australians work as nurses and midwives (over 400,000), or as teachers (over 320,000) than in gas.

What explains the difference?

The 215,000 jobs number is calculated using a type of economic modelling called ‘input-output modelling’, which the fossil fuel industry has relied on to overstate its impact for over a decade.

These models include directly employed people as well as the supply chains for these industries and the flow-on economic impacts of the industry, such as the money its employees might spend at coffee shops or the supermarket, and how many jobs they might support.

There are a bunch of flawed assumptions in these models, for instance they assume that all employees spend all of their income on buying things in their local community. This modelling has been described as ‘‘biased’’ by the Australian Bureau of Statistics, ‘‘abused’’ by the Productivity Commission and ‘‘deficient’’ by the NSW Land and Environment Court.

So ignore the number, the real number is 24,900. That comes from the ABS

Senator David Pocock has just nailed Chevron.

They said that they were a “price taker”, that they sell their gas for the world price, no matter what.

Pocock put it to Chevron that that means it is Chevron and the exporters that “would have to absorb” a 25% export tax, and it would make no difference to their customers.

I heard this perfectly clearly on both ends. Suddenly:

Chevron:

Ah, sorry Senator, the audio is dropping out.

David Pocock asks his question again.

Chevron:

Sorry Senator, it’s the audio. It’s very difficult to understand

David Pocock asks again.

Chevron:

The specifics on the mechanism are very high level and there’s been no details provided. It’s difficult to say.

Waffle, waffle. Amazingly enough, no more problems with the audio. Crystal clear.

It really is that pathetic.

Australian Energy Producers spin queen Samantha McCulloch is asked if she’d shout the PM a drink if, as is being suggested, he squibs it on a gas export tax.

It’s clearly a joke but there’s no hint of a sense of humour here. She doesn’t answer.

Australian Energy Producers is the lobby group for the gas industry.

They used to be called the Australian Petroleum Production & Exploration Association but I guess having “Petroleum” in your name is less cute than “energy”.

Their submission was a glorious list of gas spin.

One of the best things is that they attached the entire Wood McKenzie modelling and they note

“An export windfall levy could render LNG projects uneconomic and put up to 19,000 PJ of gas production and approximately A$70.4 billion of government revenue at risk. Analysis by Wood Mackenzie finds that imposing a 25% export levy on LNG exports could increase the effective tax rate of a project to as high as 83%, and reduce the value generated by oil and gas projects by as much as 94%.”

But here’s the thing about that 83% that is arrived at by combining the PRRT, company taxes and a 25% export tax.

What the modelling shows is if we replaced the PRRT with the export tax, then the tax would be lower!!

So ok, it’s your modelling, let’s do it!

Senator David Pocock is drilling in on Chevron about whether or not it pays for the gas it uses in the liquefaction process to make LNG.

Chevron is saying it is a “relatively small part”

But it gets it for free – it does not pay one dollar for that gas because it pays no royalties.

CHEVRON GETS IT FOR FREE.

Chevron is saying its pays for it in its investment, but that doesn’t remove the absolute point that it does not pay a cent for it.

Also is it a small part? Lulz

More gas is used each year by LNG firms to turn gas into LNG than is used by the entire Australian manufacturing industry

Chevron has just boasted about its carbon capture and storage (CCS) facility.  

CCS is a huge con.

It produced very little abatement and almost a negligible amount compared to actual emissions

As Rod Campbell wrote a couple years ago

According to the Global CCS Institute, at the end of 2022 there were 30 operating CCS projects in the world.

The. Whole. World.

These projects could sequester a grand total of 42.6 million tonnes of CO2 under the ground each year.

If you know your emissions numbers, you know that’s not a lot. As the first graph shows it’s less than a 10th of Australia’s 2022 emissions.

Or to put it another way, the entire world’s CCS capacity could capture the emissions of three Australian coal-fired power stations in Victoria’s Latrobe Valley.

Decades of government and industry support, many, many millions of taxpayer funds spent both here and throughout the USA, Europe, and Asia and what do we end up with? The entire globe’s CCS fleet is storing the emissions of Victoria’s Latrobe Valley power stations.

A very common thread from the various gas companies and their representatives is how much they love the Petroleum Resource Rent Tax.

Both Chevron and Woodside have both said they think it is the right tax for Australia and shouldn’t be changed.

The industry was also in favour of the recent changes to the PRRT made by the Albanese Labor Government in order to bring forward payments.

After those changes revenue from the PRRT went down. The budget papers also expect that revenue will fall further over the coming years from $1.4 billion in 2024-25 to $1.1 billion in 2028-29.

Little wonder that the industry loves this tax.

Social licence is a pretty ambiguous term, but it all boils down to community acceptance.

We’ve just heard from Woodside that social licence is really important – that’s why it invests in local sporting clubs!

Like many fossil fuel giants, Woodside is proud of its sportswashing – laundering its reputation using the local nippers clubs, while simultaneously destroying their backyard.

But clearly not everyone’s a fan.

Source: ABC News

LNG Senator Susan McDonald just suggested witnesses have suggested Australia stop exporting LNG.

80 percent of the gas extracted from Australia is exported.

I’ve heard lots of witnesses say 80 percent is too much and redirecting even a fraction of that to the domestic market would end the fake shortages which force up domestic prices.

But stopping gas exports all together? Either hyperbole or, perhaps, a dream.

Once again Chevron is boasting about how much tax it now pays and, like Woodside, saying it’s all due to their planning and things like Gorgon coming online

The invasion of Ukraine by Russia was just a coincidence I guess

Chevron is now appearing and, in its submission, it too just love, love, loves how much tax it pays.

The are oh so proud of the errr fringe benefits tax they pay.

“Since 2022, Chevron Australia has paid over A$16 billion to Australian governments, including through corporate income tax, royalties, the Petroleum Resource Rent Tax (PRRT), interest withholding tax, the offshore petroleum levy, excise, payroll taxes and fringe benefits tax.”

Is also good to know they do have some workers to pay payroll tax on.

It also makes a big claim about the Gorgon project:

“Chevron Australia is a trusted Liquefied Natural Gas (LNG) supplier. Gorgon and Wheatstone produce around 6.5 per cent of global LNG supply, supporting long-standing trading relationships with key regional and security partners, including Japan, Taiwan, South Korea, China and Singapore.”

So Gorgon produced 6.5% of global LNG. It would be interesting to know if the Gorgon project pays 6.5% of the tax paid by LNG projects around the world… They might have to take that on notice.

Woodside executives love talking about how much tax they now pay. The major point is *now*

Woodside, like almost all gas companies, paid bugger all tax until they made the very good business decision to be a gas exporter the moment Russia invaded Ukraine.

Purely due to the that event world gas prices soared and even Woodside’s tax accountants could not hide all the money

This was not due to plant long lead times finally beginning production etc etc etc. It was because Russia decided it wanted Ukraine.

And so, the amount the industry paid in tax went up, but that’s only because the amount of income they made soared.

Always remember that when companies boast about paying a lot of tax it is because they are also making lots of profits.

When companies make large, long-term capital investments, it is standard practice to go through a rigorous due diligence process that includes anticipating a wide range of risks to the project. A risk that will always be considered is a risk of future tax changes. Any company that fails to anticipate and manage that risk would be negligent.

The idea that changing taxes applicable to a project mid-way through its operational lifetime would involve “moving the goal posts” therefore simply does not reflect the commercial reality in which gas investment decisions are made.

To the extent that gas companies sell their gas via long-term contracts (typically called Sale & Purchase Agreements), the risk of future tax changes will inevitably have been considered in the contract negotiations, and the parties will have signed those contracts knowing how the risk of a future tax change is allocated.

According to Charlie Caruso and Richard Neumann, Australia-based producers’ “[e]xisting long-term Sale and Purchase Agreements (SPAs) with Japanese and Korean buyers contain fixed, oil-linked pricing formulas that are not directly tied to Australian tax settings, meaning contracted buyers are unlikely to face higher prices in the near term.”

In such cases, the producer will have known and accepted that they would thus bear the risk of any future Australian tax changes. In other long-term contracts, it is standard practice that tax changes will be managed in the contract itself via what is known as a “change of tax” (or “fiscal stabilisation”) clause, or a broader “change of law” clause.

The purpose of such a clause is to allocate the financial impacts of any such tax change (or legal change more generally) among the contracting parties in the manner specified in the contract or to trigger a contract renegotiation. Whatever the exact contractual arrangement, the point is that producers will have negotiated and signed the contract fully aware of the risk of future tax changes and who bears that risk under the contract.

Again, the “moving the goalposts” metaphor is not appropriate.

It has also been claimed that any new gas tax would be “retrospective”. This is false.

A retrospective law is a law that is deemed to take effect from some date in the past, thus changing the legal character of past actions. Retrospective laws are rare because they violate an important tenet of the rule of law, namely that laws should be prospective. The proposals for a gas export tax are proposals for a prospective law: a law that would apply only to future exports. While such a tax may change the value of past investment decisions to the investor, that does not make the law retrospective; rather, any complaint about change of value relative to the time of the investment boils down to the same complaint as “moving the goalposts”, discussed above. 

It’s also important to remember that, ex ante (i.e. viewed form the time of the investment decision), it is possible that future governments might change the law in ways that are favourable to existing projects (e.g., they might lower the rate of an applicable tax). Isn’t it funny how, when that happens, the companies don’t offer to hand back their tax windfall?

The gas industry loves to talk about the $400 billion in investment.

In its opening statement, Woodside mentioned the figure again.

But let’s think about this.

What the gas industry is saying is that the gas in Australia is worth so much that they are prepared to spend $400 billion to extract it and profit from it.

Australia’s gas is valuable. Just as oil and gas is valuable in other countries like Norway, Qatar, Saudi Arabia, and other countries around the world.

The big question is not how much companies are spending to extract that gas, they spend these amounts across the globe, it’s whether Australians is getting their fair share from extracting that gas.

Australia gives away more than half the gas its exported for free. Paying no royalties or PRRT. There is a growing number of people who don’t think that is Australia’s fair share.

The LNG companies, including Woodside will today refer a lot to the Wood Mackenzie modelling, either directly or indirectly. As our research shows, the modelling is BS in relation to the Australian gas industry and the debate about the 25% export tax.

In short, they:

1. modelled an imaginary gas project that doesn’t exist,
2. against a tax proposal no one is asking for,
3. to claim that it would make Australia a country no one would invest in.

It’s all BS!!

There’s so much more wrong with the Wood Mac modelling. For one they assume the gas industry pays 35% of pre-tax cash flow as PRRT. In 2024-25, that would mean the PRRT should have collected $15b, but actually collected just $1.5b. The dodgy modelling is just another case of big gas taking the piss.

A big claim from the gas industry, including Woodside is how much it contributes to the economy – the number the gas industry likes is $105bn to Australia’s annual GDP.

A few things. Firstly, that number is meaningless – it is counting not just the impact of the oil and gas industry but it’s spending on other industries. This is not how you count the contribution of an industry, because if every industry did it this way the contribution of each industry combined would be many, many times bigger than Australia’s actual economy!

Handily the ABS gives us the “gross value added” of the oil and gas industry  (and every one industry sector)

In 2023-24 it was $83bn.

But here’s the thing about “contributions to GDP” it includes profits. When a company makes a profit that adds to GDP. So very profitable industries contribute a lot of GDP. Does that make us all rich? Well no – especially if they are not paying much tax.

The gas industry liked to say they are a very productive industry. What that just means is they don’t employ many people for the massive amount of profit they make.

The amount of wage the gas industry pays relative to their total value added is less than other mining sector and well below the average across the economy:

The SMH published an op-ed this morning:

It’s no surprise that gas companies are splashing millions of dollars trying to convince us not to extract more tax from them. Few people will hand over money they believe they’ve rightfully earned without putting up a fight.

Read the full article here:

In its submissions Woodside (and other gas companies) has talked up about how all the gas we have has meant that they have been able to keep gas prices low

Woodside suggested:

Global market disruptions have reinforced the criticality of local gas production and gas supply to Australia’s economy. During the current Middle East conflict, while international oil and gas prices have increased considerably, Australian domestic gas prices have remained comparatively stable.

Except – as we know – since Australia’s gas has been opened up to the world market, gas prices in Australia has soared ahead of overall inflation

That they are all making sure they are keeping domestic prices stable now shows that:

1. They have control over what they charge Australians for gas
2. They have been charging Australians more for gas than they needed to
3. They are utterly terrified that the government might change how they tax gas and so are being on their very best behaviour (until after the budget)

Woodside is the company to be first up in Perth, which is not surprising, given the hold it has over the state’s politics. You can barely utter something about gas in the state without a Woodside rep popping up to try to sell their spin.

I once was on 6PR doing an interview pointing out that West Australians drivers paid more in rego than gas companies paid the WA government in royalties. Half way through the interview the host got a text message from Woodside HQ to brag that they were the biggest payer of PRRT in the country.

This is not really a big boast. It’s a bit like me boasting that I wave written more tweets than anyone else in my family. I mean big deal.

The reason they are the biggest payers of PRRT is because they have interests in Bass Strait and that’s where the PRRT was set up to deal with and that’s where the almost every single dollar of the PRRT has come from.

We will hear a bit about royalties today – gas companies (and unfortunately even Anthony Albanese) love to say they are taxes.

Remember ROYALTIES ARE NOT TAXES

Royalties are payment for resources owned by the public. It is our gas (just as it is our coal, our iron ore, our gold etc) and so companies have to pay for them. So it is a business cost.

If it seems a bit confusing as to the difference, think of it like this:

A property developer wants to build a holiday resort, but the land they want to build on is Crown land – ie owned by the state (or federal government

We don’t say hey Mr and Ms Property Developers we know your resort will be really profitable and you’ll pay company tax, so you can have the land for free!

They have to buy it from the government, but that is not a tax, that is the cost of doing business – buying land is not free!

Well currently almost all of the gas that is located offshore in commonwealth waters is given to gas companies for free

Some of the offshore gas in WA is subject to some royalties and some of it gets to the WA government but not much.

In the current year the WA state government will raise more revenue from gambling taxes than from gas royalties.

That’s pretty shocking given there are no pokies in clubs in WA!

The gas industry likes to suggest it is part of the mining industry, and while we would love a super profits tax on iron ore mining, at least irone ore miners do pay for their iron ore – and a heck of a lot more than does gas:

Why Woodside has such a hold over WA politics given how they contribute sweet FA to government revenue is a mystery that really deserves more attention.

There’s been a lot of talk today, including from Treasury, about tax changes discouraging investment in gas. It’s important to remember the following:

First: Existing projects will be fine. World gas prices are significantly higher today than they were back when many of Australia’s biggest gas projects were commenced, so the idea that our gas industry would not be viable if they had to pay a 25% gas export tax is demonstrably untrue.

Second: Many future projects will also be fine (unfortunately). The gas industry is one of the most profitable industries in the world, precisely because the prices it receives are so much higher than their costs of production.

Third: Even if it were to deter investment, this would actually be a good thing – particularly for the climate. Currently, Australia has 45 oil and gas projects in development, contrary to calls for an end to new fossil fuel developments from the International Energy Agency (IEA), the United Nations, scientists and others. For Australia and the world to escape the worst of climate change, that means no new fossil fuel projects.

The inquiry moves to Perth today for a third and final day. Here’s the program (times are Australian Western Standard Time):