By Nick Toscano and Peter Milne
Treasurer Jim Chalmers has warned that the Coalition’s objections to proposed gas tax changes could force Labor to cut another deal with the Greens and risk empowering the minor party to have a greater say over policies surrounding the future of fossil fuels.
Oil and gas sector representatives have backed the government’s plan to bring forward payments under the Petroleum Resources Rent Tax (PRRT) to generate an extra $2.4 billion in revenue over four years, and say the move strikes an appropriate balance between ensuring ongoing energy supplies and a more sustainable national budget.
Treasurer Jim Chalmers during the budget press conference in Parliament House.Credit: Rhett Wyman
However, the Greens say the changes are “less than the bare minimum” and would encourage more investment in gas projects that will worsen climate change.
Chalmers on Thursday said the changes, which had been designed not to deter investment or interfere with key trading relationships, would be put at risk if Opposition Leader Peter Dutton continued to leave important energy policy legislation to the “whims of the Senate”.
“When the Coalition vacates the field on these sorts of things as Peter Dutton indicates he wants to do today, that deals [in] the Greens in the Senate,” Chalmers said.
“That’s not in the interests of the industries that we’re talking to today, it’s not in the interests of the state, it’s not in the interest of the country, for us to be trying to pass the PRRT change to the parliament without the Coalition doing the right and responsible thing.”
Chalmers said gas was central to the Australian economy, and he wanted to move on from the PRRT debate to develop a “future gas strategy” announced in last week’s budget to encourage further investment in gas.
The Coalition is yet to reveal its position on the tax – a profit-based charge for the gas extracted – but Dutton, speaking at an oil and gas industry conference in Adelaide on Thursday, criticised the government’s series of interventions in the market in the past six months, and vowed to reverse them if the Coalition was re-elected.
“Your sector is already a significant tax contributor, paying a 40 per cent tax rate on offshore oil and gas projects,” Dutton said.
However, the Treasury predicts that many projects will never pay the PRRT without changes to the regime.
Labor and the gas industry have clashed repeatedly this year over a slew of government interventions in the market. These have included the introduction of temporary wholesale gas prices caps to tame soaring energy bills, and new powers to redirect gas slated for export as liquefied natural gas (LNG) to the domestic market instead to head off potential shortages.
Chalmers said he was proud of the consultative and co-operative way the government had worked with the industry over the design of tax reforms to “get a better return on offshore gas sooner”.
“We worked genuinely around the clock for a couple of weeks, two to three weeks to try to get that right,” he said.
Santos managing director Kevin Gallagher on Thursday said he was seeing “encouraging signs” that the government was recognising the need for stable policy settings that ensured gas flows remained reliable and affordable. However, he expected the future of the country’s oil and gas industry to face ongoing political pressure from what he calls the growing “green agenda” in parliament.
“I don’t think we can ever think we’re out of the woods yet,” Gallagher said.
Woodside, the largest Australian gas producer, has previously lamented the Coalition’s refusal to negotiate with the government over its “safeguard mechanism” climate legislation – a bill requiring the top 215 polluting facilities, including coal mines, gas-processing plants and manufacturing sites, to reduce their carbon footprint by a cumulative 28.5 per cent by 2030.
In a speech at the National Press Club last month, Woodside chief Meg O’Neill said the Coalition’s stance had opened the door to the “fringes” of politics to influence policy.
“For Australia to tackle climate change sustainably, it’s got to be done in the centre and in a way that can endure, regardless of who is in power,” she said.
The safeguard reforms were legislated with the support of the Greens in the Senate, enabling the minor party to secure additional measures, including a hard cap on overall emissions to ensure real-world emissions reduction regardless of how many carbon offsets a company purchases.
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