The Point Live: Gas, politics and the coming budget. All the day's events, live

Rod Campbell

Queensland LNP Senator Susan McDonald has put it to several witnesses that because they’re from Canberra, Melbourne or some other café-heavy location, they don’t understand how great the gas industry is for “small businesses, farmers…nurses, doctors and sparkies”, etc.

She seems to be talking mainly about communities that host coal seam gas fracking projects, in her home state of Queensland.

To suggest that everyone benefits from fracking projects in regional communities is a big stretch, with most farmers very concerned about fracking projects.

Some good research on this was done in 2013, by the industry-funded University of Queensland Sustainable Minerals Institute, in a report called Energy resources from the food bowl: an uneasy co-existence. It’s a little old now, but some of the findings are worth revisiting. Not surprisingly, many people thought that the environment and community were worse off under the gas industry.

But here’s what respondents thought about local financial capital from 5 years before and during gas development:

The chart shows that respondents who worked in agriculture, community advocacy, business and even government thought that fracking had made the community financially worse off.

So let’s stop pretending that everyone in regional Queensland loves the gas industry.

Queensland LNP Senator Susan McDonald actually just said this:

I think up to $550 thousand dollars a year the unions are asking for, for gas jobs. Plus flights around the world and Qantas gold standard and all that sort of thing.”

I dunno what Qantas gold standard is, or whether that’s how rig workers get flown…around the world (!?), but here goes with how much oil and gas workers actually earn:

$3,950 per week is damn good money – it’s $205k per year. About what a Senator earns.

But it’s less than half what Senator McDonald thinks they earn, before all the gold standard stuff! Unions like the Maritime Union and the Australian Workers Union work hard for their members…but not that hard!!

There has been a bit of talk about what the ATO says will happen to the PRRT revenue and that a tax bonanza is just around the corner.

It’s worth noting the ATO’s submission also noted

For those PRRT projects approaching the end of their operational lives, we expect increasing claims for closing-down expenditure. The resulting PRRT credits are expected to materially reduce PRRT collections in the coming years.

Because companies can use the cost of dismantling their oil and gas platforms to reduce their PRRT, as the Bass Strait oil and gas production winds down, that will be used by companies – like Woodside – to reduce their PRRT. Fun eh!

Senator Fatima Payman asks Adam Bandt what safeguards he thinks needs to be built around a 25% export tax, so it is not open to the same abuses as the PRRT.

Bandt says:

I think one of the advantages of a 25% tax on export is that it’s much more difficult to game. Obviously, the question of deductions needs to be looked at, because that’s been one of the huge flaws in the PRRT, and the ability to bank huge amounts of credits in a way that the tax was never originally designed to do, but turned out to operate that way, that is something that needs to be addressed. I’ll ask my colleague to to add anything further there, but can I just echo one of your sentiments – go the Dockers, but they shouldn’t be sponsored by Woodside. It’s I grew up watching the Benson and Hedges World Series cricket, and I was a kid being advertised to by a tobacco corporation as I was watching sports. Same thing is now happening in Western Australia, and these kids are running out as part of the nippers into an ocean that products from corporations like Woodside is going to acidify and heat and the just as we’ve seen, just as it’s been understood that tobacco is a product that, when used as intended, is toxic and will kill – so it is the case, I think, that gas and coal are the next asbestos and tobacco, and over time, people will look back on the Woodside sponsorship of the Dockers and the nippers and shake their heads and consign it to the dustbin of history in the same way that we did with Benson and Hedges.

His colleague Annika Reynolds who is Head of Climate Policy adds:

So Senator, perhaps not as exciting as what Adam just said, but to talk through the deductions in a little bit more detail, the first thing that we want to emphasize is that a shift away from the PRRT shouldn’t just be a substituting of names.

It should really be a shift from a taxation system designed around taxing super profits, which is what the PRRT is about to a system that is much more squarely designed to actually collect a clear, defined royalty value at the end of the day.

Australian gas is a publicly owned resource, and the Australian public is entitled to a portion of the value of that resource as it is extracted, so that shift away already will help define things more clearly, and we see that in other regimes.

So in places like Canada, the United States, Legacy royalty regimes with the North West shelf, there’s provisions for value at the wellhead as a way of calculating value that helps limit the amount of gaming of the system from the get go. But the other point that we would make is that some current PRRT settings are overly generous.

They allow significant deductions to be carried forwards from previous years, but also to claim future deductions, including future decommissioning costs, for example, some of the other challenges are around expected accelerated depreciation or generous uplift rates.

So we do think that as part of this inquiry, and this is one of the recommendations we’ve made, is that in addition to looking at the headline tax rate or changes to the PRRT, in doing so, if the inquiry does recommend repeal, we also urge the inquiry to consider how we can learn from historical examples, the PRT, the lessons that we can draw from that regime, and ensure that any new deduction regime is much tighter and is much better calibrated to reduce and limit gaming of the system by major gas corporations.

And the committee goes on break.

Rod Campbell

LNP Senator Macdonald attempted a couple of gotcha questions on the Climate Council’s Greg Bourne, around whether he knew the wholesale price of gas and the costs of production.

Bourne handled it fine, he knew the wholesale price was around $10/GJ (approx. $10 for 2 back yard bbq gas bottles).

Understandably he didn’t have a list of project production cost estimates in front of him…

…but I do. Here’s what Australia’s Energy Market Operator published last year:

You can see that all these established gas basins have production costs far below the current wholesale price. This doesn’t cover the big WA offshore projects, which should be lower still.

So don’t worry, Senator Macdonald, the gas companies are doing fine….as everybody knows and as Bourne told her.

The Climate Council’s Greg Bourne is answering questions about the transition from Steph Hodgins-May and explains why he believes it is happening faster:

The way I see it is, again from a climate change point of view, but also then from a geopolitical insecurity of supply point of view. I see those two drivers saying, the quicker we transition away from fossil fuels, the better. Now, those that requires strategic investments that some of those are in transportation. Some of them are with regard to, for example, EV trucks, both in the freight industry, but also in the mining industry, but a strategic way of thinking about, you know, how we go forward this thinking is going on also in Japan, in South Korea, in China, if you look at the speed at which China has actually changed its economy, part of it is to do with this insecurity of supply.

And it’s useful to remember that whilst 20% of the crude oil currently comes out, or nominally came out of the Gulf of Hormuz. Fully 50% of the world’s Romania reserves are in that volatile area. So the next shock, when this particular one finishes, is a certainty.

Which year you don’t know, but it is a certainty. And all of those countries who are suffering very badly, so Pakistan, for example, with fuel for just cooking and things like that. Parts of India, parts of Africa that rely on oil and gas, they are going to be really badly hurt, and they will be looking for many, many different ways of weaning themselves off the oil drug.

So Susan McDonald, who is doing a fabulous job impersonating a gas industry lobbyist wants everyone to know that the gas industry really truly does pay a lot of tax

She said:

“Could I just turn to this issue of tax? We just had a statement earlier about about gas companies paying tax. What the ATO has said is tax paid by the oil and gas sector increased to $11.6 billion in 22-23 with some oil and gas companies now amongst the largest taxpayers in Australia. This result was driven by a combination of commodity prices, the project production, life cycle and ATO intervention. So I’m just keen that we don’t start introducing into this discussion things that are not fact based so on the tax.”

Ahh facts. They are pesky things

Firstly there is a reason the gas industry and their spruikers love talking about 2022-323 – because that was when finally the gas industry paid some tax. And it wasn’t because of life-cycles of projects or any long-term planning by the gas industry.

It was because Russia invaded Ukraine and sent gas prices to record levels.

The gas companies made so much money even their accountants couldn’t hide it.

So yeah, in that one year they paid some tax but that is because they made a huge profit – around $79bn in 2022-23

But the amount of tax they paid was much less than you would have expected. Other mining companies (and the banks) pay between 23% and 28% of their profits in tax. \

The gas industry in 2022-23 paid just 15%

So no I am not sure I’d be bragging about how much tax they paid.

Not sure Susan McDonald is enjoying this particular session.

She was just read to filth by Greg Bourne of the Climate Council after she asked about whether he is worried about gas investment going elsewhere:

What I would say is that you seem to be suggesting that the smallest of the gas companies should be kept going for year after year after year, and the largest of the gas companies in the world should be taking the profits as they go forward.

And I think what we and others are suggesting is, whilst there is an opportunity to get a strong export tax, that money should be reinvested in the country, not in gas, not in coal, not in oil, but in renewable energy, when you renewing the economy as we go forward. That’s why I say the key that so many governments have done is they have not embraced the future. They just hugged the past. And that’s what I am hearing from you.

McDonald seems a little taken aback by that:

I’m so sorry you don’t think I embrace the future. I think that is a very sad reflection on me, and I’m sorry that that is your view. I’m a big fan of of us embracing the future when it is real and not and not far off into the distance, and certainly not taking up additional prime agricultural land.

(Wait til she hears about what coal and gas do!)

She then moves to Bandt’s voting record when he was in the parliament, which – why?

It’s worth dwelling on just how popular the idea of a gas exports tax is.

In February this year, polling by Redbridge on behalf of The Australia Institute found that nearly two-thirds (64%) of Australians agreed that gas companies should pay a 25% tax on gas exports. Only one in twenty (6%) disagreed with this.

Notably, significant majorities supported the tax across all voting intentions, but the highest levels of support came from those outside of the major parties. Two in three (67%) One Nation voters agreed with the tax, while seven in ten (70%) Greens voters and voters for other parties and independents agreed.

Greg Bourne from the Climate Council is also giving evidence in this session. He also has a statement he would like to give:

They say it’s insanity doing the same thing over and over again, and yet, Australian Governments, over the years, been caught in gas corporations for decades and supporting more gas production, more exports and more investment. But Australians overall have very little to show for it.
We’re one of the last largest LNG exports in the world, but the benefits really haven’t arrived.
There’s a Faustian bargain that’s at play here. Governments have sold our resources under dubious promises of wealth, while corporations have taken the riches and left us with an overheating planet and escalating costs, and the climate costs are coming home with worsening disasters, higher insurance costs and more pressures on household budgets alike, we’ve even had to implement a gas reservation policy to avoid shortfalls, even though we export five times more gas than we use.

So we at the Climate Council support performing Australia’s gas export tax settings, the revenue collected from that tax should rebalance and begin to start heading us towards funding more renewables, more electrification, other clean energy and diversing, diversifying our way from geopolitical threats.

We believe that we should be able to cut our gas bills really quite significantly, and just investing in the 2 million rented houses those families could save around about 5 billion a year.

Today’s fossil fuel crisis has once again revealed the cost of relying on coal, oil and gas. The world is moving on, and Australia’s government’s own modeling projects a 67% reduction in gas and LNG production over the next 25 years. Ever since climate change came on the radar, fossil fuel companies have faced an existential crisis today, like a rat in the corner. We’re seeing them fight tooth and nail to maintain a status quo that’s enriched them but hurt the rest of us. The industry’s pushback can be taken in this context, self serving and a desperate attempt to project their super profits. Fossil fuels are on the way out. So it’s time to move forward. A gas exports tax in some shape or form can fund the solutions that put Australia in control of its energy future.

Adam Bandt is summing up here:

A flat 25% tax on Australian gas exports would conservatively generate $17 billion a year. That’s enough to make public transport free in every state and territory, and still have cash left over to invest in growing non polluting industries of the future and to start to repair the damage big gas has caused. Tax gas now, while we can, it’s a finite resource. We won’t be extracting gas for much longer if we want to stop the climate crisis and have something to sell the rest of the world that won’t kill us. This is why ACF has made two recommendations to this inquiry. One, replace the broken PRRT with a flat 25% tax on export revenue and look at the corporate tax regime for big gas. And two, close expense deduction loopholes to stop big gas gaming the system. Big Gas greed has to stop gas. Corporations are fuelling the climate crisis and hurting people while paying little or no tax. It’s the Australian people’s gas, but the corporations make the profits and we pay the price.

Rod Campbell

This is how they’re seeing the inquiry over at oil and gas industry news site Energy News Bulletin:

I think there could be a real market for a fossil fuel executive themed edition of Guess Who?…at least among readers here!

Adam Bandt, in his role as the CEO of the Australian Conservation Foundation is now giving his statement to the committee:

The gas tax meant to tax their super profits is clearly broken. Graduates pay more in hex repayments than the gas giants pay in gas tax. The PRRT is meant to be a 40% tax on oil and gas super profits, which should have generated $26 billion in 2022 after the Russian invasion of Ukraine, but instead, because of loopholes that desperately need closing, Australia received only around $1.5 billion the same corporations driving the global cost of living crisis are driving the climate crisis. Gas is as dirty as coal. Methane is almost 90 times more toxic than CO two as a climate pollutant. The algal balloon in South Australia is driven by gas from Santos, we had fires, floods, then fires over summer in Victoria, extreme weather, Whiplash, fueled by Woodside Australian gas sent offshore returns home as bush fires heat waves floods and cyclones,

The SuperPower Institute gave evidence a little earlier – perhaps the most concerning thing is that Labor Senator Varun Ghosh seems very worried about future investment for the gas industry.

At some point the government will decide their priority is the interests of Australians rather than gas companies, but I am not sure I can say that day is today.

The SuperPower Institute has noted that the PRRT was better suited for oil rather than LNG

This is 100% correct. The PRRT was designed for oil in the Bass Straight. Back in the 1980s no one was thinking about LNG exports like we have no – and certainly not about fracking.

The big problem is that the PRRT does not actually tax LNG, it taxes gas.

So what happens is for example a company gets gas out of the North West Shelf. It then sells that gas to itself to then turn it into LNG. That sale point is what the PRRT applies to. The PRRT has absolutely zero care about how much money gas companies make out of LNG.

There are rules about what price the gas company can sell its gas to itself in order to be eligible for tax, but they can be (and are) manipulated by the companies to do what it can to reduce the level of tax it is liable to pay.

Taxing exports avoids all of that and taxes LNG exports not a notional thing of gas companies selling gas to itself.  

Rod Campbell

The Japanese Government makes more money from Australian gas exports than the Australian Government.

Read that again if you have to.

Japan’s Petroleum and Coal Tax makes gas companies selling gas into Japan pay tax. It raises about $AUD 8 billion per year.

Australia’s Petroleum Resource Rent Tax (PRRT) raises about $1.4 billion per year…but wait, almost all of that is from aging oil projects, not the new-ish gas export projects.

Here’s the key chart from The Australia Institute’s new report out today.

Susan McDonald is now claiming that there has been a lot of evidence based on ’emotion’ and not ‘economics’.

There has literally been a bunch of economists here. And then two people – Kellie Court and Konrad Benjamin – talking about the impact on people.

So McDonald, an accountant (and child of one of Australia’s biggest cattle barons) apparently thinks that hearing from people who represent those who are impacted by our energy prices is ’emotion’, while ignoring all the annoying economists who have spoken on how the gas industry doesn’t pay enough tax. Right.

Susan McDonald is back! She asks about jobs in the fossil fuel industry (so not just gas):

Toby Phillips says:

We’ve done analysis on the number of Australian jobs. This is a few years old now, but analysis on the number of Australian jobs exposed to the global decline in demand for fossil fuels, and it is in the order of about 300,000 jobs over 30 years. That that is a lot of jobs, but I suppose we see there’s an upside. There’s new value chains being created, and we’d like to see policy settings such that encourage Australian industry involvement in new value chains and generate and create new jobs. I mean that that’s the promise of policy packages like future made in Australia, like the opportunity for us to develop energy intensive green exports. I think the challenge that we seek is that some of our policy settings kind of leave us with one hand tied behind our back because we’re trying to develop these industries, and meanwhile, they’re competing with foreign, unregulated foreign competitors that are using Australian coal and gas exports to undermine our global competitiveness.

All of that is to say that we see this as a bit of a bit of an inevitable global transition that we have an imperative to respond to whatever timeframe we talk about, whether it’s 20 years, whether it’s 50 years, if we roll forward far enough into the future, demand for Australian fossil fuels will decline, and there’s an imperative for us to have policy settings that manage an orderly transition rather than being the ones left holding the bag at the end

McDonald is now running the line that renewables do the same thing, which is a very tired argument that people like McDonald love to run.

McDonald then jumps to defend the gas industry on tax:

Could I just turn to this issue of tax? We just had a statement earlier about about gas companies paying tax. What the ATO has said is tax paid by the oil and gas sector increased to $11.6 billion in 22/23* with some oil and gas companies now amongst the largest taxpayers in Australia. This result was driven by a combination of commodity prices, the project production, life cycle and ATO intervention. So I’m just keen that we don’t start introducing into this discussion things that are not fact based on the tax.

*That is company tax. PRRT barely went up. The gas industry loves to talk about 22-23 – they finally made so much money (due to Ukraine) that even their accountants couldn’t hide it all. Remember as well company tax is paid on profits so saying you are one of the biggest payers of company tax is like saying you are one of the most profitable industries

Could Australians see lower prices from an export tax?

Toby Phillips says:

Probably yes, if there is, you know, and I think economics is always very complex to model out. But if there is a price that is only paid on an export, and in our proposal of an export transition framework, if there’s some kind of price or quantity based restriction that only applies to exports, then there’s an equivalent incentive to avoid that and to supply it domestically. Just going back to the point about leveling the playing field for domestic industries. We think that that our proposal both can account for the fact that our domestic energy intensive industry has to compete with unregulated foreign industry. So we’re kind of tying one hand behind their back, and then we’re supplying the coal and gas to their competitors, so it can solve for that, and it can also minimize their exposure to global price volatility by creating that incentive to supply energy domestically

Toby Phillips says there is an imperative for Australia to act now – on multiple fronts:

We support the calls for simple revenue based tax on gas exports, and we would support the comments from from others that say the PRRT hasn’t worked. We can look at projections, and it doesn’t look like it’s going to work, and a simple tax is is consistent with with policy goals and with good economic management.

What we also propose in our submission this, this longer term framework is really looking at the broader arc of energy export industries. And so we’re actually about to embark on an on an economic modeling exercise that have been in the planning even before the current global fuel crisis, to investigate this question. As Miles said previously, we’re facing a global transition over the coming decades, changing demand for our exports, changing global energy markets. What an energy export transition framework would do is much like the safeguard mechanism does domestically, is it would send a price signal. It would send a price signal about our expectations for long term trajectories for these industries, and about the phase down over many decades, the phase down of expected global demand for fossil fuel exports at the same time, it would encourage investment in new green value chains. We know that a lot of our trading partners are shifting as rapidly as they can away from using fossil fuels, and so there is an imperative for us to be part of those new value chains and not play the simple role of the fossil fuel exporter that’s left holding the bag at the end. So certainly our viewers that this is an opportunity to have a broader broader and longer term transition framework for our export industries

Miles Prosser from the Centre for Policy Development and his colleague Toby Phillips are now speaking to the committee and Prosser starts by saying:

Look, I think it’s worth noting that in the current situation, domestic user of our fossil fuels would be facing carbon regulation under the safeguard mechanism, for example, but a customer for our fossil fuels that receives that through exports is not facing the same level of regulation. So even before we sort of get into some of the details about gas taxes, there’s an unlevel playing field there at the moment, between a domestic user of fossil fuels compared to the export market.

Phillips says it is possible to give a fair go to Australians and maintain export relations:

So the level playing field is a really important issue. We talk about that in our submission, and we’d love to expand more on that. Perhaps the only other thing I’ll add in terms of competitiveness is that buyers of our gas will be paying the global price regardless of what tax regime is put on it, the people who will be paying the tax will be the investors and the owners. These are largely foreign investors and owners. And to the extent that we we hear talk about this harming trade relationships, harming competitiveness, we’ve got to be clear that that’s largely coming from entities that are investors in our export terminals, not customers of our export terminals. So I think that’s an important distinction to clarify.

Prosser brings it home:

So you’ve heard from many other people so already that there is plenty of room within the system to design a gas tax that doesn’t impact those sorts of decisions, that provides a fair return to Australians that are not currently receiving it, and maintains those important trade relationships

David Pocock asks who should Australians believe about what gas companies are saying about what they pay:

On the one hand, we have gas companies, I assume, spending millions of dollars on ads telling us that they are a huge contributor, a massive taxpayer, and on the other we have the ATO saying that export gas companies are systemic non payers of tax in this country. Who should Aussies believe?

Beathan Mullen:

I’d point to. Our own analysis, which simply shows that the gas industry pays around I think it’s about $1.4 billion a year in tax under the PRRT, and under our model, we would get a return of something more like $13 billion per year. And if you complete, compare ourselves to global norms, we are at the bottom of the table. We take around 18% of tax from gas, the gas industry on a cash flow basis, and other comparable countries are taking north of 75% so I think that’s, that’s the bare facts that we would ask people to consider.

A flat export tax would bring about $17bn a year

LNP senator Susan McDonald is again up and she is asking about the ‘impact’ to regional communities, which she says are benefitting from the gas companies through services they provide.

Beathan Mullen from the Superpower Institute says:

Well, I can only speak for our specific design Senator, and our specific design is to preserve the current incentives to invest in gas to the extent that they exist. To your point about the benefits that flow to communities, I would put it that most of the companies benefiting from investments in Australian gas industries are foreign owned, and the profits currently flow overseas. And the changes that we would implement under our policy would result in a much larger tax take for the Australian people, which could be reinvested in the communities that you’re concerned about,

McDonald:

So you think the 25% flat export tax would damage further investment, but that’s why you’re proposing your your Levy?

Mullen:

We haven’t modeled specifically the 25% tax and the the the impact it would have on investments. But at a conceptual level, a flat tax applied to exports would change some investment incentives.

ACOSS as well as Punters Politics and Richard Denniss talked about the impact of the export market on power prices.

Because the gas market is now linked to the overseas market, the world price for gas affects what we pay for gas

Since the opening of the Gladstone LNG terminal in 2015, the domestic gas market has been linked to the world gas price.

This – as the Australia Institute warned back in 2014 – led directly to higher gas and electricity prices:

The reason it affects electricity prices is because the way the market operates is the prices is set by the most expensive form of electricity generation supplying the electricity – and often that is gas:

Australia is foregoing $17 billion a year in revenue by not taxing gas exports at 25%.

What services could $17 billion a year buy?

Put simply: almost anything.

Health and aged care

The figure is roughly equivalent to the entire annual cost of the Pharmaceutical Benefits Scheme (about $17 billion a year).

It’s close to a third of what we spend through Medicare (about $40 billion).

The Commonwealth could eliminate most out-of-pocket costs for GP visits (currently about $4 billion) and make primary care genuinely universal.

It could clear elective surgery waiting lists multiple times over (about 900,000 admissions annually; average cost $5,000-$15,000), funding millions of additional procedures.

Prevention and public health (chronically underfunded at $2–3 billion) could be expanded several-fold, tackling obesity, mental health, and chronic disease before they reach hospitals.

Aged care, long recognised as under strain, could see a step-change in staffing, access, and quality (current Commonwealth spending is $30–35 billion).

Education

Smaller class sizes nationwide. Hiring tens of thousands of additional teachers (at ~$100,000 per teacher $17 billion could fund about 150,000 teachers) would allow a meaningful reduction in student–teacher ratios, particularly in disadvantaged schools.

Universal early childhood education and care. Making high-quality preschool and childcare free (current Commonwealth childcare subsidy is $12–14 billion) would boost school readiness, lift workforce participation, and narrow socio-economic gaps before children even start school.

Major equity reform, directing sustained investment into disadvantaged communities: additional teachers, learning support, mental health services, and infrastructure targeted (total school funding is about $90 billion across all governments).

Deciding where would we invest $17 billion would be a challenge.

Wouldn’t that be a good problem to have?

What about claims from the gas industry it is paying enough tax?

Beathan Mullen:

Well, we clearly say that they’re not. And I think the important thing to do here is to compare apples with apples. I think it’s in the gas industry’s interest to present themselves as paying a lot of tax, and to include in the figures they provide corporate taxes that every corporation in Australia pays, and other forms of taxes that every business in Australia pays, that may may look the number, may make the number look very large, but what we’ve done in our work and in our submission, I think it’s on page two, is to demonstrate how Australia compares with other fossil fuel producing countries.

And so when, when you, when you look at the numbers on a like for like basis, when you look at the returns to governments on a cash flow basis, which is what we’ve done, the gas industry is at about 18% and that compares with other fossil fuel producing countries that are well over 75% that’s that’s more like the global norm.

So Australia is just well below the global norms on this issue.

The committee is now hearing from Beathan Mullen, the Chief Executive Officer of the Superpower Institute.

They don’t like the ACTU proposal of a 25% flat tax. Instead, they want what they are calling a ‘fair share’ tax, which is, to my non-economist ear, a profits tax – that would also involve the Australian government contributing to production.

Here is Mullen explaining it:

The Fair Share levy is designed as a two way cash flow tax on profits for the gas sector, it is levyed at 40% and it would capture both the 40% of profits on a cash flow basis from gas produced and liquefied in Australia and exported, but also it would involve the Australian Government contributing 40% of the costs of those projects.

This is a particular style of cash flow tax known as a brown tax, and it is designed specifically to be economically neutral. And so your question about it not affecting gas export volumes, that’s that’s the specific design of the tax. When you contribute both on the cost side and on the profit and receive profits on the other side. That makes the instrument economically neutral. It doesn’t change the incentives to invest. Doesn’t change the incentives for the amount of gas to be produced, and it doesn’t change the prices at which gas will be supplied, and that’s why it wouldn’t affect exports.

So the incentives to continue investment here is one of the priorities, which is fine, if you believe we need to keep exploring and get more gas in the first place (and research from groups like Climate Resource say is unnecessary because other countries are working to wind down their use even earlier than first planned)

The questions for ACOSS were around what would be the impact of a 25% export tax on gas. The answers from Kellie Court and Peter Davidson were lower domestic prices (because there would be more available domestically and less having to be bought from the spot market). Both acknowledged that the gas industry claims it would increase prices (how – it is an export tax, so if they sell it domestically, there is no tax there) but they believe from the modelling (and also just common sense) that it would actually lower prices for people in Australia.

Court says the money raised from a flat tax could also go to helping people on lower incomes lower their own costs:

$17 billion a year can certainly go towards supporting the acceleration of renewable energy in this country, and in particular, helping households. ACOSS has been doing a lot of work around how we can permanently reduce energy bills, especially of low income households.

So we’re talking about people in social housing, private rentals, low income home owners by helping them improve their home energy upgrades, so things like insulation, access to solar, batteries, other thermal efficiency, and we know that that can reduce bills permanently, up to $1,300 a year. This isn’t a one off rebate or a sugar hit.

This is permanent reductions that will help people. It will also make them more resilient to climate change, in particular heat waves. And of course, it will help reduce emissions. We’d also like to see, as we’ve been doing some work around better targeted measures to help people access electric vehicles. So we do think that measures are needed to help people on low income access electric vehicles. So we think again, there’s an opportunity there to use the funding to help people in that respect.

Kellie Court is now up – she is from the Australian Council of Social Service.

Court refers to this joint statement

In between was Joshua Runciman, Lead Analyst, Australian Gas Institute for Energy Economics and Financial Analysis (IEEFA). You can read their submission, here. (Number 19)

Do we have a shortage of gas?

Nope

The industry exports 5 times more gas than Australian use!

Shortage? Lulz. Nope.

LNP senator Susan McDonald made the wild claim that she personally knows more than 20,000 people who have directly employed by the gas industry, which is very funny because – how? How does anyone PERSONALLY know 20,000 people employed by an industry? I am an extrovert who has never had a problem making friends and has lived all over and I don’t know 20,000 people. Susan McDonald has 5442 followers on instagram. She has yet to crack 25,000 followers on her facebook. She only got 5727 first preference votes at the 2019 election and 4413 first preference votes at the 2025 election. SHE WENT BACKWARDS.

But wanted a factcheck on that number used by Richard Denniss – where did he get the 20,000 figure from? Greg Jericho pointed this out in the original post, but to end all debate, here is Matt Grudnoff with the link – According to the Australian Burau Statistics latest Labour Force publication shows that the oil and gas industry employed 24,900 in February 2026.

So why are we focussing on an export tax (aside from what I said about the problems of a windfall tax)?

Well, it’s because the industry is focussing on exports.

Back in 2023 I was on another Senate committee that also had the head of the Australian Energy Produces (the gas lobby group) Samantha McCulloch told the Senate:

When we look at the east coast of Australia, where we’re particularly seeing the energy pressures, around 80 per cent of the gas is produced in Queensland. 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.”

But the gas produced in Queensland that is exported is not subjected to the PRRT.

So, the gas industry has chosen to get gas to export, so let’s tax it!

The problem is as the gas industry has shifted to exports, the PRRT has not responded to capture that revenue

The reason we are calling for a 25% flat exports tax on gas and not a windfall profits tax is that the PRRT is already supposedly a windfall profits.

The problem is the PRRT like all windfall profits taxes is subject to a lot of laws and accounting tricks that determine when the profits are made etc. It makes it easy to avoid.

By contrast a flat 25% export tax cannot be avoided. You export, you pay the tax.

We need that because PRRT has so many holes that is utterly fails and right now barely delivers anything. We are talking rounding a error in the scale of the budget.

Richard Denniss has pointed to new research showing the Japanese government gets more revenue from our gas than the Australian government:

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).

Imagine telling people to their face that Japanese services are funded by a bigger tax on Australian gas than the Australian government has decided it should tax Japanese companies like INPEX!

Read the new research here

There’s always a lot of noise about Japan needing our gas.

You will hear Madeleine King (who notionally represents the Australian public) that our gas is vital for national security because if Japan doesn’t get our gas they will go to Russia.

But not only will a gas export tax not raise the price of gas to Japan, we also need to remember that Japan sells more of Australia’s gas to other countries than is used by Australians!

Independent senator Fatima Payman is also asking questions at this inquiry and asks Richard Denniss:

Dr Denniss, in your submission, you’ve shown that Qatar collects five times more government revenue than Australia from similar volumes of gas exports. What is your response to the gas industry’s claim that high taxation would deter investment, cost jobs and Australian families would have to bear the brunt when we’ve seen that Qatar and Norway clearly haven’t had that problem.

Denniss:

My response is, I’d be shocked if a gas executive earning millions of dollars a year didn’t argue that the best thing the Parliament could do to help Australia was to help the gas industry with free gas like let’s be clear, that’s their job. To convince you of that. Why anyone takes their their evidence seriously is the surprising thing given, as I’ve said, you know, the Norwegian, former Norwegian Prime Minister literally laughing at these claims Inpex and other gas companies currently still looking to develop new projects in Norway and elsewhere.

So, yeah, I think we just need to lean into the simple fact that, of course, the gas industry will argue that if we make them pay more tax, bad things will happen to us, because if they said, if you make us pay more tax, we’ll feel sad and pay smaller dividends to our shareholders, most of whom are foreign. I don’t think many Australians would care.

So of course, they’re trying to threaten Australians, but this is the pathetic point. This is our gas and we’re the ones being threatened, whether it’s by foreign gas companies or foreign governments. You know, Australia is the 13th biggest economy in the world. We’re the third largest fossil fuel exporter in the world. The idea that we’re kind of passive and weak in this situation, to be clear, is pathetic. It is pathetic. And we should be able to stand up to these companies, and indeed, to other countries, and say, it’s not just gas. We’ve got a lot of so if you really want to pick a fight with us after being a reliable exporter for decades, bring it on.

We’ll just write your name down on the list here, and we’ll have a chat. We need Australians. Need the parliament to stand up for us, the owners of our resources, and to stop standing up for foreign companies that are profiting from selling our resources.

Dean Smith then wants to know if Konrad Benjamin knows about the causes of inflation.

(I told you he was phoning this in)

Benjamin:

Well, I mean, you hear it in the news every single day. It’s it’s petrol, petrol, petrol. Then it’s gas and energy, and then it’s like price gouging by we have a very monopolistically driven economy where certain industries have exorbitant power. I looked at flights to get here today. Turns out not many airlines fly from Newcastle to Canberra. That wasn’t so cheap, so I drove. I mean, there’s lots of different drivers. Clearly, there’s a war going on overseas that’s making fuel that we need to get diesel and food around all the time, that’s driving inflation as well.

So, you know, I understand there’s many drivers, but the gas issue is one where that’s a key input into everything we do and into energy, and it’s a key input into energy prices. And as a renter who can’t have solar on my roof, I notice the increase of my electricity bill all the time.

Richard Denniss:

Can I just add that? In Norway, they feel rich, not poor. At the moment, the price of their exports has gone up, they feel rich, not poor. In Australia, we’ve so badly designed our energy system that when the price of our exports go up, we feel poor.

Smith:

Other other economic commentators would point to the excessive increase in government spending measured as a proportion of spending to GDP as a key driver of inflation in the Australian economy, putting cost of living pressures on Australian families and businesses. You don’t think that government spending is a contributor to inflation in the economy at the moment?

Benjamin:

Well, listen, people pick and choose the villain they want, right? And so they go, ‘oh, government spending. Oh, what that’s, that’s wages for teachers, that’s, that’s wages for nurses, that’s, that’s services that are really important’. So when I look at drivers of inflation. I’m not an economist. I’m not going to nitpick over which has what x driving percentage, but I am going to point at the most obvious one, the one that other countries don’t seem to have an issue with, the one that we could completely avoid if we just like I know, there is research done that shows when the East Coast is attached to the export gas market, when we export our gas overseas, compare it to WA that has a gas reserve. Our energy costs go up. Our gas price goes up because we pay the same bloody price as countries overseas do.

And Aussies look at that driver of inflation, whatever it is, we look at that and say, Well, hang on, that’s our gas. Why don’t we get our gas for free, and that would assist the problem. So that, let’s say people who do pick on government service spending as a driver of inflation, we can say that’s actually quite important, though, isn’t it? As a teacher, I know my wages come from the government, and they go that’s a pretty important thing to keep spending on. So then we can keep spending on that.

Smith then wants to know whether WA should get the majority of any money raised because of the amount of gas coming from WA:

Richard Denniss can’t believe his luck:

Look, it’s again, you’re the parliament. You divvy it up however you want. Wouldn’t it be a great problem to have? Who should get the $17 billion a year? I think if we can all agree to collect it, I’ll happily come along here with proposals for how to divvy it up. But should it go primarily to West Australia? Should it primarily go to help young people build houses? Should it go primarily to invest in infrastructure? Maybe it can fund the parliament’s incredibly ambitious defense spending, I don’t know, but what a great problem to unite the parliament. How best to divvy up $17 billion a year? I can’t wait to be involved in that conversation.

Liberal senator Dean Smith wants to know if Richard Denniss thinks the PRRT could work in theory, or that he didn’t object to the PRRT in theory.

Smith is phoning in for this, but also, he appears to be phoning in his interest in this.

Smith: I specifically thought I heard you say seeking clarification that you did not object to the theory of the PRRT.

Richard Denniss:

Okay, what I was trying to say was the concept, the underlying principle, the theory, if we want to use that word behind the PRRT, was, Australians deserve a fair share for their oil and gas, and we designed that system decades ago to get it. It just clearly hasn’t delivered. So the kind of original intent, you know, I agree with its original intent, but we have to evaluate it by what it does, not what it’s, you know, the bureaucrat 40 years ago thought.

Smith: But the PRRT has not been a tax regime that has been static. It has evolved, perhaps not at the pace you would have liked, but it has evolved. So why do you think a 25% tax on gas exports, rather than advocating for further improvement refinement of the PRRTis a better way to proceed?

Denniss:

Because I’ve been working on this for nearly 20 years and previous parliaments and previous public servants, determination to not fix this problem has convinced me it’s a dead end. So it was the Turnbull Liberal government that initiated a review of the PRRT in 2016 specifically because of this problem, the Liberal government at the time, realized the PRRT was collecting no tax in part because of work of The Australia Institute. I gave evidence before the Callaghan inquiry. The Callaghan inquiry’s recommendations were that it was actually working as intended. I gave evidence previously which raised this issue, which led to the previous parliament….(Smith says he needs short answers, so Denniss finishes with: “I’ve given up trying to fix the PRRT”.

Smith: What do you understand, Mr. Dennis, to be the future projections of the PRRT?

Denniss:

Well, the ones that are in the budget, future revenue projections of the PRRT, yeah, the ones that are in the budget, the four years that we see in the Budget papers, show no significant growth, nothing like the $17 billion a year that I’m talking about. And let’s be clear, the idea that the gas industry and their modeling says this, we’ve got the gas industry saying, Oh, if you listen to Richard, you’ll miss out on lots of tax. Don’t listen to Richard. You’ll get a lot more tax if you don’t listen to Richard. The idea that gas executives want to pay more tax and that somehow I’m trying to trick the parliament, it’s their job to pay as little as tax as they can.

Smith:

So Mr. Denniss, you do not believe the Australian Tax Office projections that the PRRT, in its current form, will generate about $6.9 billion over the next four years.

Denniss:

I do believe that. I just believe that $6.9 billion over four years is a lot less than $17 billion a year.

Larissa Waters:

You’ve mentioned Chevron, we just saw an approval, yet another approval, but of an extension of Chevron’s Gorgon gas project late last week, on calculations, I’ve seen that comes with a $300 billion gift of royalty free gas.
Firstly, can you reflect on those figures, and if you agree with them, how is that sensible economic management?

Richard Denniss:

Look, I haven’t done the calculations myself. Given the size and length of that project, you know, that number doesn’t surprise me, and it doesn’t surprise me that we’re giving it away for free, because we’ve given nearly all of that big export those big export gas basins, giving gas away for free. This is the Australian way. And by the way, if uncertainty was scaring flighty investors, you know, you would think that these industries would be all sitting on pause at the moment saying, Well, this might take a year or two to play out.

No, no, they’re rushing full steam ahead. And then if the parliament acts on in Australia’s interest and taxes, and they’ll say, Oh, we didn’t know, so yeah, again, once you realize that Inpex are currently trying to develop gas in Norway, and maybe they’re coming before the Senate, I’m not sure it’d be a good question to ask them, but I think it will help you all take with a very large grain of salt any of these sort of threats they make.

And to be clear, they’re doing their job. They’re getting paid millions of dollars a year not to know how to drill a hole, like if I’m a gas executive, I can find anyone who can drill a hole for me. I can outsource that, but convincing parliament to give me tax gas for free. That’s the real skill. That’s why these people get paid a fortune, right?

So if I’m a gas executive, my main job is to convince you to give me the right to extract gas one and then give it to me for free too.

And then there’s some drilling that I’m sure someone’s taking some good care of.

Greens leader Larissa Waters is here and she asks about gas companies profiting from war. Richard Denniss says:

I mean, firstly, the gas industry never think it’s a good time to tax the gas industry, so we shouldn’t be surprised that they just like they’re literally profiteering off the back of a war.

We shouldn’t be surprised they’re using that same illegal war to defend the tax regime that benefits them so much as is often the case, if you listen carefully to the gas executives, which is a struggle, they’re always walking both sides of the street. So on the one hand, they’re saying, we’ve got all these long run contracts. You can’t fix it. But at the same time, they’re saying, Oh, if we change anything now, everything will dry up overnight, and we’re in real trouble. What? Nonsense. So Australia, as the gas industry, to sound like them for a minute, has been a reliable exporter of gas for decades. Are they saying we haven’t earned any respect for decades of exporting free gas? Are they telling us that that having Australians having given away all of this gas for all of these years that these countries are now actually threatening us, rather than saying thanks for being the reliable partner the gas industry say we’ve always been, apparently, no, no, we’re, you know, we’re exposed with no friends in the world, unless we suck up to them and offer some more free gas.

So firstly, they should pick a lane. You know, are we reliable providers of gas who’ve earned a good reputation over decades, or are we bobbing around in a big, bad world, and unless we kind of, unless we do what we’re told, we’ll get in trouble. But then there’s the other point, the price of gas won’t go up in Japan when we tax it, the price of gas won’t go up in Korea, when we tax it, the price of gas won’t go up in Sri Lanka, when we tax it, their profits will come down. This is the whole point. We’re going to sell the same amount of gas at the same price under the same contracts. And to be clear, if they could pass the tax on to Korea or Sri Lanka or Japan or anywhere else they would, and they wouldn’t be complaining.

The reason they’re complaining is that they know they’re going to keep selling at the world price. It’s just they’re going to get a smaller slice of it once we start do what Japan does and put a tax on our exports. So no one’s talking about ripping up contracts, no one’s talking about turning the lights off. No one’s talking about, you know, geosecurity, geopolitics, you know, being ruined in the Asia Pacific. Because, like Japan, we try to get a fair share out of our tax It’s nonsense.

But once you realise that the contracts are in place, the quantity is already agreed, the prices are set at the world prices. We’re haggling about how much tax they pay on the way out the door. I’m sure you’ll come up with a way to phase it in. You know? I’m sure that, yeah, and these contracts that they talk about are getting rewritten all the time. It’s not like there’s one big contract for Australian gas, because you know what? It’s not ours.

We gave it away for free. These are contracts between BP, Chevron, ConocoPhillips, Inpex and hundreds of customers around the world. So it’s not like Australia has a contract to sell gas with Japan, if only then we really might be able to get some leverage out of all of this. No, no, we’ve given our bargaining power away to foreign gas companies.

Like we’re not even able to actually be at the table in those negotiations, because we gave them the gas for free, and we said, you go get the best deal you can. So, yeah, look, the gas industry never think it’s a good time to pay more tax, but the idea that we’re leaving it to British Petroleum, American Chevron and Japanese impacts to negotiate gas contracts in the Australian national interest is bizarre.

David Pocock asks Konrad Benjamin whether he thinks politicians are underestimating how much punters care about this.

Benjamin:

I think politicians ignore just how much we’re paying attention to this, at their own peril. That’s generally what I think, and I think whether they do something in the budget and decide to fix this as quickly as possible and start getting a return as quickly as possible, so that we because we know that this is, this is a question for regular partners like us.

This is a question of us versus them.

So when we hear talking points from the gas lobby, when we hear equivocation of, oh, well, maybe we don’t understand what’s happening in the country. I’m from Newcastle. I am from a coal mining town, and my mates in the mines who are getting a paycheck are on my side. I’m stoked for them that they’re getting a paycheck.

Good on them, at least someone’s getting paid.

But they understand that even their paycheck isn’t getting paid what they’re owed for this industry, and they understand that if we don’t take what we are owed from this industry, we’re the ones left paying the tax bill.

Because, like I said before, whether we do it hard or not, we’re paying 30% on our salary. So it’s only fair. It’s only time that they start paying what they owe us.

David Pocock:

How would the 25% gas export tax interact with the domestic market and actually help manufacturers and households?

Richard Denniss:

Yeah, so let’s there’s a lot of misunderstanding about how a raw material like gas sells. People are kind of trained to think about what’s the price of an iPad. I don’t know. What’s the cost of the plastic, what’s the cost of the glass? And we add it all up. Well, things like gas and coal produced all around the world and purchased all around the world, and they sell at a world price, and the gas industry will just sell it for you know, that price.

And if they can get it cheap, they make a lot of money. If they have to pay tax, they’ll make a little bit less money. But the price is set by the world market.

So the reason an export tax is so important for Australia now is that in 2013 as Senator McDonald said, we had cheap gas in Australia because we didn’t export it from the East Coast and and the gap. There was abundant gas on the East Coast, and everyone that wanted it could get it cheap, but the minute we hooked it up to the world market, the price of gas, the price of gas went up 300% and there was no compensation for households or industry or anything else.

The price of gas just went up 300% once we started exporting it, once we put an export tax on those, in order to avoid the export tax, are going to compete with each other to sell it to Australians. And you know, my prediction is that the price of gas would fall by 24.99% the wholesale price, because all of the gas companies will be competing to sell a molecule to anyone they can that’s tax free, and they’re better off selling it at a 24.99% discount to Australians than selling it to someone in Japan and paying a 25% tax. So we will see a significant increase in supply of gas, and we will see a significant reduction in the price of gas, and the Commonwealth will collect a significant amount of revenue. Economics never got better for Parliament than an export tax.

David Pocock then gets the question call and declares that he has sponsored a pass for the Punters Lobbyist – which was an idea of Konrad Benjamin’s to crowdfund for a Lobbyist for the People, who would seek meetings with politicians, raising concerns from Punters’ followers.

This is disclosed on my website. It’s also disclosed on pass register.com.au, and I’d encourage my colleagues to do the same with their sponsored passes.

Pocock asks:

A lot’s been covered already, but I’m really interested in these calls from some to introduce a windfall profits tax, given we already have a windfall profits tax, the petroleum resource rent tax, which isn’t working, what if you could just tease out the difference between a 25% flat gas export tax and a windfall profits tax and potential differences in revenue?

Richard Denniss:

Well, let me start with the concept. Australians, for 30 years have been told that governments just can’t give things away for free, you know, we’ve introduced user pays for medicine. We’ve introduced user pays for higher education. We’ve introduced user pays for a birth certificate.

As a nation, we’ve been told governments can’t just do things for you for free, you know, and the conservative side of politics has usually been loudest in making these calls. Yet, apparently, when it comes to gas, we should give it away for free – comma – unless they have a bumper year, and if they have a bumper year, they’ll pay for some of their raw materials.

Let’s define bumper and year and pay carefully in long legislation that they’ll run rings around the city.

So to be clear, a windfall profits tax is better than doing nothing, but it’s not as good as Norway does. It’s not as good as even our state governments, with their simple royalties, do. So we’ve calculated, The Australia Institute estimates that the windfall profits from the gas industry in the last in the last five or so years, post Ukraine invasion by Russia, have generated $112 billion in extra profit, but the PRRT is barely moved.

So you’re right. Our windfall profits tax regime is a disaster for taxpayers and a bonanza for the gas industry. So given 20 years of failure of past parliaments and previous public servants to come up with a decent windfall profits tax, and given the principle the gas industry should pay for gas every time they pull some gas out of the ground, then we should obviously move to a system like an export tax that will be both hard to avoid, because Australian avoidance seems easier than Norwegian avoidance, and as I said before, well designed will pump gas into the Australian domestic market.

So we can finish off this idea that a massive export has got a shortage? As I said to Senator Ghosh, you can have both, but there should never be a year where the gas industry gets its gas for free.

So if we have a 25% gas export tax, I’d settle for that. Now, if someone wants to come up with a complicated combination of the two, well, maybe I’m an economist, in theory, maybe that works, but in theory, the PRRT works.

So yeah, I think given where we are at this point in history, the idea that the PRRT will kick in one day, when even Japan is forecasting significant declines in demand for gas.

You know, we can’t keep telling ourselves there’s a there’s a payday coming in decades time, if we have a complicated enough super profits tax or windfall tax.

So as an economist, I can’t say a windfall tax is a bad idea. I just think an export tax is such a good idea that suits our needs right now, suits our budget right now suits the need to divert gas to Australia. Right now we wouldn’t need a reservation policy if we had an export tax, and it would actually push the price of gas down for Australians.

So an export tax solves all those problems. A windfall tax solves a lot of problems in theory, and the one we’ve got has collected is virtually nothing in practice.

Just a final question to you on the domestic side of things, and the price that we pay for gas, we’ve seen reporting that after Russia’s invasion of Ukraine, gas prices go through the roof.

A urea manufacturing plant in Brisbane shuts down. We now have a massive shortage of urea, and it turns out that governments, state and federal, have put $600 million worth of taxpayer money to build a urea manufacturing plant in the northwest. It’s almost a farcical situation.

Susan McDonald:

Just my last question. The chair’s given me a last quick question, so I’m reflecting on on one of the other submissions, he says ‘heavy taxes on tobacco were enacted with the explicit goal of killing off that deadly industry. That is how it should be for fossil fuels. We should be take talking openly, regularly and brazenly about the need to both aggressively tax the fossil fuel industry while clamping down on it and managing its decline’. I’d put to you that this is actually what this agenda is really about. Is about shutting down future fossil fuel projects.

Richard Denniss:

Look for some people, I’m sure it is, but this is why this parliament should embrace this unique opportunity, because you’ve got everyone from Clive Palmer saying, let’s do this to people who want to shut down the fossil fuel industry in its entirety. You’ve got a Coal Baron and an enthusiastic embracer of climate science who can both agree that a tax on gas is a good idea. And then you’ve got the head of the biggest company in Australia, Commonwealth Bank, saying, and it’s a good idea too. So you’re right. Some people want that. You are spot on. And then there’s Clive Palmer, and then there’s there’s your colleague, Andrew Hastie, and then there’s all sorts of people across the political spectrum. I can’t tell I think one nation think we need a fairer share.

McDonald:

I haven’t seen your assertion. I just want to be clear that that’s not your position. To shut down the fossil fuel industry.

Denniss:

No, I want to milk it!

McDonald:

We need more investment so more taxes and more of this.

Denniss:

No – we don’t need more investment. I just need to milk what’s there.

There are no gas companies up today – but don’t worry – we have the LNP’s Susan McDonald who is very invested in standing up for the poor, poor gas companies. Please – pour one out for the very poor gas companies, who have seen a stock market increase when the ASX has seen an overall decrease.

Susan McDonald:

In my experience in the parliament is that often the reason why it’s not a simple solution is because we live in a complex world of different regions of Australia, different issues, and you’ve named raised a couple of things this morning that I just want to fact check you on understanding where you’re getting some of this data.

So you’ve raised employment numbers of 20,000 I probably know more than 20,000 people who work directly and fairly closely directly with the gas industry. Where did you get 20,000?

(Factcheck on anyone knowing more than 20,000 people)

Note from Grogs: Senator Macdonald wants to know where Richard got his figures for the gas industry only applying a bit over 20,000

Well he got it from the ABS – in February the oil and gas industry employed 24,900 people

Richard Denniss:

Look, I’ll take that on notice. I’m relying on the Australian Bureau of Statistics. Your definition of people close to the oil and gas industry might be different to the Commonwealth’s premier statistical agency, but yes, you often hear the industry say it’s 200,000…

Denniss goes on, but McDonald is annoyed and wraps him up.

McDonald:

I might have to just keep your questions to just your answers, if you’ll take that on notice. Terrific. Turning back you talked about the Japanese tax the you did a press release this morning of that, I think that that tax includes coal, is that right? And oil and gas. It’s my understanding that Australia’s gas into Japan is about 40% of the amount of their gas.

So what would that mean, then Australia’s the tax raised on Australian gas is, I’m just not quite sure that the number that you’ve put in your press release is actually reflected by the reality of how much gas in Australia…

Denniss:

So again, I can take that on notice and give you more detail than is in the press release, there is a paper that we’re publishing today.

But to be clear, we’re talking about, we’re comparing the amount of tax raised by the Japanese government on our gas imports to the amount of tax raised by the Australian Government on our gas exports. And because that’s the point I’m trying to make, because that’s zero, 40% yes, but because the number we’re comparing it to is zero this year, next year, last year, 10 years time, well, the PRRT isn’t collecting revenue from our gas exports.

There’s no royalty on our gas exports. (McDonald: Not true, because Queensland has royalties on gas.)

…I’m talking about the Commonwealth of Australia. I’m talking about the parliament of Australia. I’m talking about the parliament that…(McDonald: the calculation shows that the the collection of PRRT will do what, as always, was modeled to do, and increase rapidly.)

… Well, I am referring to the data as it is, if you want to talk about forecasts. Well, the gas industry has been telling us it’s on the cusp of paying us a lot of tax for a lot of years. I’m referring to the recent historic data, not projections by the gas industry.

McDonald:

And I guess that’s where I’m interested. Is the projection. So we’ve seen relatively recently, big investments into extracting gas from Australia. Queensland in particular, was only in the last sort of 15 years, and that has meant that towns like Chinchilla and Roma and Dolby, which were tumbleweeds in the main street before CSG came to town is now paying for the very nurses and doctors and dental care for the farmers and graziers and whatnot of that region, literally, including the Medevac flights. And I appreciate that when you’re in Melbourne or Canberra, it’s hard to see those very positive impacts that you see, if you’re from regional Australia, the places that I come here to represent, I was interested in your comments about about the investments of other jurisdictions. And, you know, I think Mr. Benjamin is almost proposing an Oz gas sort of model where we’ll have more Australian government investment in in more gas. What I would like to to understand is, have you looked at other jurisdictions who are now competing for that very investment? Didn’t we know that the big gas investments recently have been in Alaska, in into Louisiana, Argentina has a very assertive incentive program, given that Australia’s capital costs for gas drilling is some of the most expensive in the world. How do you think the impact of a 25% gas tax would go on Australia, you know, continuing to receive that sort of investment, and you know, the small businesses and the regional people that I know how they’re going to be affected. Have you done some work on that?

Denniss:

We’ve done an enormous amount of work on that. Thank you for the question. So I guess the first place to start is the fact that for years now, Australians have been told we have a shortage of gas, and that if we don’t invest in more gas wells, that we won’t have any gas. And at the same time, of course, we were one of the world’s largest exporters of gas. So I think what’s interesting about the debate at the moment is, haven’t heard the gas industry once say there’s a shortage of gas.

So this is very important, because if, if, for some reason, the gas industry delivered on its threats, I’ll explain why they won’t, but imagine they delivered on their threats and stopped investing in new gas extraction. Well, we’ve got far more gas than Australians could possibly use already.

So if, and I don’t believe it, but if they delivered on their threats to stop investing in gas, we’ve got about 400% more gas than Australians need. So there’s no shortage. There’s nothing to worry about there. Second you raise a really sad point that Australia, one of the richest countries in the world, can’t provide good medical care to people in regional Australia without charity from a gas company. Well, I too, I’m embarrassed by that. And if we spent, if we collected $17 billion on tax, imagine what we could invest in regional Australian Health.

Now to the actual threat and choosing my words carefully, I don’t believe it for a second, and there’s wonderful quote from the Norwegian former Norwegian Prime Minister, literally laughing about how the gas industry made these threats to Norway, literally laughing about how they said they’d never invest again. But just to give you a simple proof point that we can all understand Inpex

Inpex are currently seeking a new gas project in Norway right now, right now…they are mocking us. They are playing us for fools. When they say, if you don’t give me free gas, I’ll take my bat and ball, but not your gas, and go somewhere else – they’re going to Norway

Richard Denniss then jumps in here:

Can I just add that the Australian taxpayer spends a lot of money exploring gas fields. We have public agencies dedicated solely to that task. We have explicit subsidies to help that task. And indeed, I think the Queensland Government had a $20 million subsidy released last year encouraging people to go exploring.

So the idea that the Australian taxpayer isn’t involved in exploring for oil and other resources in Australia is demonstrably untrue. We have whole agencies dedicated to that task. It’s just like, unlike Norway, we don’t get money back now. We don’t have state investment in oil companies. Sorry, I should clarify. We don’t have Australian state investment in oil companies. The Japanese government is invested. The Malaysian government is invested.

There’s plenty of state investment in Australian oil and gas. It’s just that it’s other governments from other countries that can see the profits for them of investing.

So yes, our system is quite different from Norway’s, and the reason that The Australia Institute prefers a 25% revenue tax over anything complicated like you’ve described is that the Australian Public Service, the Australian Parliament, has shown itself unable to negotiate complexity with these companies, so there’s no problem with having a well designed profits tax, but that’s what the PRRT is supposed to be.

The PRRT is supposed to pick up 40% of windfall profits well after the Ukraine war. If you compare the gas price after the Ukraine war to the gas price before the Ukraine war, The Australia Institute estimates the gas industry has made $112 billion in windfall profits. Now the PRRT is supposed to be a windfall profits tax at 40% – 40% of $112 billion is over $40 billion but the Commonwealth Budget papers make clear that that hasn’t happened.

So you know what? When the gas industry says it’s complicated, Richard, you don’t understand Richard. You don’t understand Norway. You don’t understand you don’t understand now I do understand. I understand that we have a windfall tax in place. That’s what the PRRT is. And I understand, understand that it is a failure, and I understand that we’ve reviewed it on multiple occasions, and on multiple occasions this previous parliaments have decided to leave it the way it is. So to be crystal clear to those saying maybe we need something more complicated, I’d put to you that maybe they’re a bit smarter than you realise.

They might be smarter than me, but they’ve certainly been smarter than previous parliaments and previous generations of public servants whose arrogance led them to think, yes, yes, I’m very clever. I can negotiate the complicated deals of a PRRT with the world’s best paid industry, and we’ve failed completely. So that’s why an export tax is a good idea, because it’s simple, and the only way to avoid it is to sell gas to Australians instead.

Varun Ghosh then moves on to Konrad Benjamin with a sort of attempt at a gotcha – “in your submission, you referred to the rate of tax, or effective tax in Norway, the structure of the industry is different in the way that the Norwegians have set up exploration and Australians have over many generations. Now, is your observation in the submission that we should adopt a similar model to Norway across all elements of its system, or is it simply a comparison of the total tax take?”

Benjamin:

Yeah, unfortunately, my basic economics teacher, 101, high school grade understands that this is actually complex, and what options we have, there are many before us.

We’re suggesting sort of one: When I compare to Norway, that’s, I understand that it’s part state invested and partly state owned. When I talk to regular punters on the street, they love the idea of a partly state run system that gets a good ROI with some private investment as well, like Norway set up. And I think, you know, the best analysis from, you know, people like Richard Denniss is that this is the comparison an effective tax rate of 78% plus, because they got the super profits and things like that.

Anything that brings us closer to Norway in any respect, whatever the smart nerds do when they do their research go this is the best way to do it. This is the most effective way. There’s the Norway model that seems very effective. There’s the Qatar model, where they own the entire industry, and they do 70 billion a year or something, and we do 2 billion, like as a citizens. So I’m open to any and all of the above, this 25% tax that certain senators have floated on export revenue. Sounds more simple. Sounds like we’re going to get something. We’re in a position now where I’m like, oh, it’s all looking pretty good from where we are sitting.

Questions are now being moved around and the first question from Labor’s Varun Ghosh (representing the government) is about how would the proposed changes to tax “overlap with existing taxes and regulations? Is it simply in addition to the current framework, or are there other consequential changes that would flow from that?”

Richard Denniss:

Well, that’s entirely an issue for the parliament. Of course, I the PRRT is so unsuccessful. If you kept it in place, it would hardly be burdensome. But if you wanted to do everybody a favor and replace something complicated that achieves nothing with something simple that achieves a lot, personally, if you got rid of the PRRT and replaced it with a 25% gas export tax, I think that would be, I think that would be a good outcome.

But to be crystal clear, the PRRT is so ineffective that I think keeping it in place would hardly be burdensome.

Most of the PRRT that’s paid today is paid by legacy oil production, not even gas in these enormous new in these enormous new basins. And it’s Treasury that informed the Senate a couple of years ago that not a single new offshore gas project had paid any PRRT.

Now I trust they’ve got access to more data than I do, but we can see from the figures that there’s not much there. We can see from the figures that after Ukraine was invaded and the price went through the roof, that it didn’t go up. And we’ve heard from Treasury saying at least in 2023 that they hadn’t paid any at all. So frankly, I don’t think it would matter if you left it in place and put the put an export tax on but personally, if you swapped one for the other, I think I think we would be so much better off. Sounds fine to me.

Konrad Benjamin is asked why Australians are so energised about this and says:

We’re told and the budget’s about to drop, we’re told every day, ‘oh, we can’t afford to invest in schools’ like ‘we can’t afford to make our education like on par with some countries around the world that are just as wealthy.’ We have to cut costs here, cut funding there, cut different services that we rely on. Our medical systems under strain. We have to cut stuff. We’re about to hear that. We’re about to hear that the global economy is going through a shock, and we have to tighten our belts, because something that happened overseas is making everything more expensive for us. And we’re about to be told that we can’t afford anything, except when we look at what we are as a nation, lots of resources that we all collectively own, we know it not to be true. And like I said, I’m like, genuinely I shouldn’t be here. Punters Politics exist because I spoke about this issue, and regular Aussies went, Yeah, this doesn’t only [not] pass the pub test. This is outrageous, and we we’ve been sold out because we shouldn’t have we shouldn’t have issues with what we can afford. We should be we should be looking at how we can invest in future businesses, how we can supply basic medical and dental to sort of anyone who wants it. This is the kind of country how wealthy we are. Aussies know it. I know it. We know it. So when politicians tell us, and they’re about to tell us that we can’t afford it, we know it’s a lie, and this gas in this gas issue is the perfect example of how it’s a lie.

First question is to Richard Denniss and it comes from the committee chair Steph Hodgins-May:

Dr Denniss just picking up first on the Japanese import tax that we’ve spoken about. What actually is the gap, and how much more revenue does Japan make from Australian gas than Australia does?

Denniss:

So the Japanese government, on average, collects around $8 billion per year from a tax that it has on imported oil and gas and coal. And Australia is the one of the largest, usually the largest supplier of gas to Japan. What’s interesting is that the Japanese introduced this tax back in 1978 after the first OPEC oil shock, to help Japan cope with the insecurity of oil, and when Australia and Japan and most the world agreed that we should have 90 days of liquid fuel on on within our domestic markets at any point in time, the Japanese understood that that was expensive, so the Japanese actually imposed a tax on imported energy to fund that, and it worked.

Worked very successfully in Japan now has well over 90 days of liquid fuel, and taxing our gas and our oil has helped them fund their preparations, preparations that we’re told we’ve been unable to afford to pursue.

The Japanese tax gets more interesting when you realize that it was modified around 2013 to not just help them with liquid fuel security and energy efficiency and other things, but to help them with the cost of climate change.

So to be clear, the customer of our gas, the customer of our coal, is taxing the imports, increasing the cost to their consumers to help them prepare for the cost of climate change. So well done to Japan. I have no criticism of the Japanese government whatsoever.

They’ve used the power of their state and their budget quite well. They’ve taxed our imports to fund their oil security. They’ve taxed our our gas exports, our coal exports, to fund their preparations for climate change. I’m just pleading with this parliament not to fall for the line that were Australia to introduce a tax on our gas exports that we that the Japanese government would somehow be concerned or insulted.

They might be disappointed, because the Japanese government is a significant shareholder in impacts that makes a significant profit selling our gas to Japan. So these calculations, these don’t even include the on selling of Australian gas into global spot market. Japan does that. No, this is just and those figures don’t even include their consumption tax, which also, you know, they collect tax on when, when the gas is sold to consumers and when electricity sold to consumers.

So no, they literally have a gas, coal and oil import levy to collect 8 billion, $8 billion why? To fund services and fund preparations in Japan. Yet we’ve been told in recent months, oh, we couldn’t have possibly afforded to stockpile any oil in Australia, very expensive, don’t you know? So, yeah, look well done Japan. I don’t blame them at all, but I repeat what I said before. This is not about harming Japan.

The price of gas paid by the by Japan will not increase when we impose this tax. What will happen is the profits made by the people selling the gas will fall. There’s not two gas prices out there, the high tax Norway price and the low tax Australia price. It’s all the same molecules. It’s all the same methane selling at effectively a world price minus transport costs.

So might this level of profitability, I suppose, explain the diplomatic pressure that Australia, that Japan, puts on Australia, on the Australian Government? Yes, yeah. And we saw this when Steven Miles was Queensland Premier. He proposed a small increase in coal royalties and proposed or actually implemented he was premier at the time, spending the money to build public housing and to lower the cost of public transport to 50 cents per fare. The Japanese ambassador was not very diplomatic in expressing his views and Japan’s views about Australian domestic policy. Likewise, recent suggestions that we should stop giving literally more than half of our gas away for free. No royalties paid on gas in Commonwealth waters, no PRRT collected on that gas according to Treasury.

Again, the Japanese ambassador has not been terribly diplomatic. So, yes, I’m sure they would prefer to make large, untaxed profits selling Australian gas to Japanese people. I do not begrudge them that. Don’t begrudge them that at all.

Konrad Benjamin is here – you might know him better as Punters Politics. He says he is there for all the every day Australians who are unable to get in to a room with politicians to talk about fairness. He makes a joke about the fundraisers politicians hold:

Normally that would cost, what? $3,000 a head? Sorry, just a little political joke to warm everyone up there

No one in the committee laughs. Missed opportunity.

Benjamin:

We’re here today to discuss the need for Australians to receive what we are owed for our natural resources that belong to us.

And I see on the schedule, as I was looking, there isn’t a single regular mum or dad, single nurse, teacher or tradie, so I’m here to say a few things on their behalf, because before I used to make tiktoks, I was a teacher, and my job was to make complex stuff simple so that the kids could understand things and walk out of the room more informed than when they came in.

And honestly, my job hasn’t changed. It’s just got a couple of million followers now. We were told that this topic gas, PRRT is too technical. It’s too complicated. We were told that we regular punters like me, don’t worry about it. The politicians, you’ve got it, they’ve got it covered. And we were told that repeatedly by the corporations and lobbyists who were in fact getting rich by us not understanding it.

So here we millions of regular Aussies are now paying attention, and we understand a few things that we might not have understood before. We understand that Australia’s gas is incredibly valuable. We understand that we’re giving most of it away for free to foreign corporations. We understand that those same foreign corporations pay close to bugger oil tax. We understand that countries like Norway looked at their oil and said that belongs to us, and their politicians went about and made rules and contracts that resulted in Norwegian citizens having access to a $3 trillion sovereign wealth fund.

And we understand this is the most important point. We understand that a stable democracy like ours, with lots of valuable natural resources, gives us a lot of leverage. So the question we punters have is, how is it that we are holding all of the cards yet still losing a kid in my class put his hand up and asked me a question one day. He said, So do politicians know the system is broken? Why don’t they just fix it? And unfortunately, I had to tell that kid the truth.

I had to tell that kid honestly, it’s not broken. This system is working perfectly for the foreign corporations who funded the lobbying campaigns, who funded the political campaigns of many politicians in this room, and gave many of politicians in this room, colleagues, jobs, sweet lobbying gigs as gas lobbyists.

Punters Politics, honestly shouldn’t exist. I shouldn’t really be here. A million Australians following my content online, watching someone explain gas isn’t a success story.

It’s a symptom of a government that has stopped working for the punters who elected them. So while you hear from the heads of Woodside Santos, Exxon impacts whoever comes and you’ll hear them make tell stories about why they don’t they don’t want to make 5 billion.

They’d rather make 10 billion. I want you all to remember that there are nurses living in cars, teachers buying lunch for kids who can’t afford it. Tradies skipping meals so they can feed their family. Because no matter how tough we punters have it, no matter how high the cost of living goes, we still pay our tax and we don’t get our gas for free.

OK, so who is on this committee.

It’s a mixed bag (they all are) and because this is a Greens led committee, Senator Steph Hodgins-May is chairing it, with the government’s Senator Varun Ghosh as deputy.

Also from Labor is Lisa Darmanin, while the LNP has Susan McDonald and the Liberal senator Dean Smith (who is appearing via video link). David Pocock is also on this committee.

The Australia Institute’s Richard Denniss is first up – here is part of his opening statement:

Is Australia getting a fair share for its gas exports? No. Australia is one of the largest gas exporters in the world. No one doubts that the gas industry makes very large profits.

No one doubts that Australia exports very large amounts of gas, but Australians now doubt that they are getting a fair share for that, the Australian Institute’s released research today showing that Japanese government gets more revenue from Australian gas imports than the Australian Government gets from Australia’s gas exports.

Now, perhaps the parliament thinks that’s fair.

Perhaps the parliament thinks that’s as it was designed to be, or perhaps this is a unique opportunity for parliament to come together on an issue that seems to unite, unite parliamentarians in a way that few issues do to fix this issue, The Australia Institute estimates that a 25% gas export tax would raise $17 billion per year for a country that’s permanently told we have a budget crisis.

For a country that’s permanently told we can’t afford to invest in services.

What a once in a lifetime opportunity to collect $17 billion for something as simple as getting a fair price for the gas we export.

The cost of delaying that decision is $350 million a week. So I do hope that not only does this parliament finally grasp the nettle and get a fair share for Australians.

I hope they do so soon, because three, $50 million a week is money we will never get back. And while I note that, you know there are concerns now, well, let’s go back a step – we’ve been told for a long time the gas industry employs a lot of people.

They don’t, you don’t hear them make that claim anymore.

Their jobs are important for people who work there, but it’s around 20,000 of the 25 28 million people in Australia working gas. We’ve been told for a long time that they pay a lot of tax. Well, we now know that’s not the case.

We’re now being told that we have to keep things the way they are, lest we upset our research, the Australia Institute’s released today makes clear that the Japanese government is happy to tax Australian gas. Indeed, the Japanese government is getting more revenue from taxing Australian gas than the Australian Government is.

…The Albanese government recently cut the cut the petrol excise to help Australians get through a cost of living crisis. Excuse me, a decision that I agree with, or the Japanese could always cut their import tax if they’re really concerned about the price of gas.

But let me be crystal clear, and I’ll end on this point, a gas export tax will not increase the price of gas paid by Japan. It will not increase the price of gas paid by Korea or any of our other customers. There’s no Norway premium for Norwegian gas, which is heavily taxed.

All of the gas is selling at the same world price. The reason the gas industry is sad is they know the customers won’t pay the higher price. They know they will receive a lower after tax profit. And most importantly, I think, and most misunderstood, we know the gas industry is good at avoiding tax because it pays so little of the petroleum resource rent tax that’s been promised.

We know they’re good at avoiding tax so we can bank though they’re good at avoiding tax. Support tax in place, they’ll do the one thing they can to avoid paying the export tax, and that’s sell that gas to Australians.

We will increase the supply of gas to Australians by taxing gas exports. We will increase the supply of gas and we will push the price of that gas down. If we have a 25% gas export tax will be at least $17 billion a year better off. We will have more gas supplied to Australians. We will have lower gas prices here in Australia. And if you’re worried about the concerns of countries like Japan, Fear not. They’re taxing our gas. There’s no reason we can’t do the same.

Hello and welcome to a special edition of The Point Live. We are up and running because a) we have no life, and b) it’s the first day of the Senate’s Select Committee on the Taxation of Gas Resources. The Greens have called for this inquiry and it is very timely because the pressure is on the government to do something about how gas is taxed (or not really taxed) in this country. Today is probably going to be a bit earnest and information heavy given the appearance list:

But we will cover off the best bits, as well as give you a bit of background as to what is going on and why.

You’ve got Amy Remeikis with you for most of the day. I have had just one coffee and a chocolate caramel because everything just seems calmer in a non-parliament week.

Ready?

Let’s get into it. (The senate really needs to update their hearing music)