Jim Chalmers says Peter Dutton should back $2.4bn gas tax hike ‘on its merits’

Peter Dutton wants cuts to red tape and approval times for the industry, but Jim Chalmers isn’t entertaining any new reforms.

Jim Chalmers says the Coalition shouldn’t “leave the industry hostage” to the Greens and support the PRRT changes. Picture: NCA NewsWire / Martin Ollman

Jim Chalmers has urged Peter Dutton to back in the government’s $2.4bn tax hike on offshore gas projects “on its merits”, indicating any compensation for the industry will be dealt with later.

The Opposition Leader last week revealed in an interview with The Australian he would demand the government reduce red tape and approval times for gas projects in exchange for the Coalition’s support for the petroleum resource rent tax overhaul.

“There is a reasonable ask of the government to give something back to the industry by way of reduced regulation, by way of condensed timelines for approvals, and that will be part of our discussion with the government in relation to this bill,” Mr Dutton said.

The Treasurer pushed back against any significant amendments to the PRRT legislation.

He pointed to the government’s promise to develop a future gas strategy, which was announced in the May budget and will attempt to ensure Australia has enough gas as the country moves towards 82 per cent renewables by 2030, as a way to “support the policy certainty that industry needs going forward”.

“Our changes to the PRRT will deliver a fairer return for Australians sooner, without risking investment, supply or our trading relationships,” Dr Chalmers told The Australian.

“Peter Dutton should support these changes on their merits not leave the industry hostage to the Greens party in the Senate.”

The government plans to introduce a 90 per cent cap on the use of deductions that can be offset under the PRRT from July 1, which will bring forward more revenue from the nation’s offshore gas projects sooner.

The deductions cap can start in July without legislation passing parliament because PRRT annual returns are not lodged until after the end of the income year.

In the meantime, the government will consult on a draft bill that will legalise the arrangements.

The Australian understands the Greens, who have slammed the tax hike, are working on the assumption the Coalition will ultimately oppose the tax increase, leaving them in a balance-of-power position in the upper house.

Opposition Leader Peter Dutton. Picture: NCA NewsWire / Martin Ollman

The Australian Petroleum Production and Exploration Association, which represents the oil and gas industry and has been pushing for bipartisan support on the PRRT changes, said the $2.4bn tax hike provided certainty so companies could consider the future investment required to maintain domestic and regional energy security.

APPEA chief executive Samantha McCulloch indicated another budget measure – a review of environmental management regulations for offshore resources – could help deliver Mr Dutton’s demands on approval timelines.

“We will work with the government and opposition to ensure these reviews result in greater clarity and timeliness for environmental approvals,” she said.

“Regulations that provide clarity and certainty for industry while maintaining environment and consultation objectives are desperately needed. Recent cases have highlighted the approval uncertainty threatening to undermine Australia’s international reputation as a stable investment destination, risking domestic and regional energy security and emissions reductions as well as substantial economic returns for Australians.”

Santos’s $US3.6bn Barossa gas project faced a major setback last year when it lost a Federal Court appeal over insufficient consultation with traditional owners. Santos has committed to delivering the project in the Northern Territory by the first half of 2025, but analysts are cautious about delays.