Jackie Trad’s royalty ideas plan run out of gas

Treasurer Jackie Trad’s has received the recommendations from a $100,000 gas royalty review - and there appears to be no clear way forward.

JACKIE Trad’s $100,000 gas royalty review, headed by former South Australian premier Jay Weatherill, has concluded without a recommendation on a way forward for the multi-billion dollar industry.

The Courier-Mail can reveal the former Labor premier’s report was handed to the Treasurer earlier this month, with three royalty models, one of which isn’t even complete.

Another model – proposed by Queensland Treasury’s Office of State Revenue – was described to Mr Weatherill during his review as “amongst the worst” designs possible for decreasing gas prices, increasing gas supply and attracting investment and exploration.

LNP says Jay Weatherill will land ‘retirement windfall’ for heading gas royalty review

Ex-Labor premier to lead Qld gas royalties review

It means the gas companies still have no certainty over a royalty framework eight months after the review was announced, curtailing their ability to expand and create jobs in an industry that is already slated to pour $620 million into Budget coffers this year.

The three options in Mr Weatherill’s report include an industry-preferred, well-head value model, based on the value of gas extracted; the OSR model, based on volume; and one proposed by Mr Weatherill, which would see a legislated transfer price.

However, the last model requires substantial more work, and the industry is demanding another independent expert, like Ernst and Young, Deloitte or PwC, be brought in as it does not trust the OSR is capable.

Ms Trad declined to comment on the contents of the report but offered a personal briefing to industry yesterday following The Courier-Mail’s questions.

“Mr Weatherill’s report has been received by Treasury and will be carefully considered by the Queensland Government,” she said through a spokesman.

The industry’s mistrust with OSR follows a shock court case win by Australia Pacific LNG last May that found a Petroleum Royalty Decision drawn up by OSR in 2005 was invalid and of no effect, in a ruling that proved the catalyst for the current review.

Justice Bond was scathing of the OSR in his ruling, and criticism of the office continued during Mr Weatherill’s review.

A submission by University of Queensland’s Centre for Natural Gas director Professor Andrew J. Garnett described OSR’s model as “simplistic” and departing “significantly from best practice”.

The leaking of the content of Mr Weatherill’s report follows an admission by the Government earlier this month that it didn’t know the review’s final budget despite the fact it was meant to finish in late December.

At the time, Ms Trad flagged the need for further work.

Mr Weatherill has finished his involvement and begun his new job with Andrew Forest’s philanthropic Minderoo Foundation in Perth.