Gas tax hike must be backed by Coalition, says Jim Chalmers

The Treasurer has warned producers would suffer if Peter Dutton voted against Labor’s proposed tax hike to offshore gas

Treasurer Jim Chalmers. Picture: NCA NewsWire / Glenn Campbell

Jim Chalmers has urged the ­Coalition to support Labor’s gas tax changes, warning it would be “diabolical” if the government were forced to negotiate with the Greens to get the policy through the upper house.

Speaking to a leadership breakfast in Perth, the Treasurer said it would not be in the best interests of industry if Labor’s proposed changes to the petroleum resource rent tax were dragged out in long negotiations in the Senate.

Labor’s push to tighten the PRRT – a tax on offshore gas production – will raise an extra $2.4bn in tax revenue over four years and has been broadly accepted by the industry.

The comments come after Peter Dutton pledged to unwind Anthony Albanese’s sweeping market and regulatory interventions in the oil and gas sector, and rallied resources companies to “fight” alongside the Coalition against energy policies driven by Labor’s “renewable zealotry”.

In a speech to the Australian Petroleum Production and Exploration conference in Adelaide, the Opposition Leader warned oil and gas executives that Australia is “witnessing one of the most interventionist governments in our nation’s history”, and accused federal Labor of being “deeply sceptical of the free market, of ­individual enterprise and autonomy”.

The Coalition has not indicated whether it will support the changes, which need to be ­legislated, while the Greens say they will push for a more punitive tax increase amid concern the changes had been “designed by the gas industry”.

It comes after the Coalition voted against Labor’s safeguard mechanism – requiring the ­nation’s 215 biggest emitting ­facilities to cut nearly 5 per cent of emissions each year out to 2030 – which forced the government to strike a deal with the Greens to pass it through parliament.

Dr Chalmers said the proposed change to the way offshore gas production was taxed had been developed through weeks of consultation and collaboration with the gas industry, and he branded the increase as a “sensible and methodical change”.

“When the Coalition vacates the field on these sorts of things, as Peter Dutton has indicated he wants to do today, that deals the Greens in the Senate,” Dr Chalmers said.

“The announcement that we made is not one that the industry would have chosen if they had every possibility arranged before them,” he added.

“But it’s the best outcome for Australia, it’s the best one that recognises investment and supply and trade, and it would be ­diabolical for Australian industry to see the Coalition vacate the field and to leave a policy as ­important as this to the whims of the Senate.”

Dr Chalmers said extra tax revenue would be used to fund healthcare and cost-of-living measures in its budget, and called for Mr Dutton to outline what cuts the Coalition would make to Medicare to fund the difference.

“This is an opposition which is addicted to division. They say no to almost everything, they need to do the right and responsible thing here.”

Santos energy boss Kevin Gallagher on Thursday said gas was the “main game” in the nation’s transition towards net zero and accused activists of being determined to “kill” the oil and gas sector and discredit carbon capture and storage.

Mr Gallagher told the APPEA conference that renewables were “not the holy grail” and that gas would continue to be essential to industrial processes such as fertiliser production which was crucial to feeding the world.

Additional reporting: Cameron England