Home > media > Japanese government taps more benefit from Australian gas than us

Japanese government taps more benefit from Australian gas than us

March 19, 2017

Japanese government taps more benefit from Australian gas than us

Heath Aston, The Sydney Morning Herald, 14 March 2017

Japan is collecting more tax revenue from Australian liquefied natural gas than the federal government, heightening concern the public is missing out on the wealth benefits of the gas export boom.

Japan, which is the single-biggest buyer of Australian LNG at 30 million tonnes a year, levies an import tax that will deliver $2.9 billion to its national coffers over the next four years, according to research conducted by the International Transport Workers’ Federation, a member of the Tax Justice Network.

By comparison, Australia will not receive a cent in petroleum resource rent tax from gas projects operating in federal waters over the same period.

The $800-million-a year PRRT collected in Australia – which has halved over recent years – is largely paid by established oil operations in Bass Strait rather than LNG producers.

Tax campaigners said on Tuesday that it was a “national scandal” that Australia’s customer, Japan, could derive more financial benefit in revenue than the country that owns and sells the resource.

Treasurer Scott Morrison is weighing up whether to rework the Labor-designed PRRT scheme, against veiled threats from the petroleum industry to launch a mining tax-like campaign against changes to the system.

The Australian Petroleum Production and Exploration Association, representing the industry, has previously said the review was timely because it would expose a “dramatic collapse in profits” behind falling tax revenue.

Prime Minister Malcolm Turnbull will also sit down with energy company chiefs on Wednesday to discuss the government’s other gas-induced headache, supply shortages and spiralling prices in east coast markets.

In October, Fairfax Media revealed that by 2021, when Australian LNG exports eclipse the current market leader Qatar, the government of the Persian Gulf state will take $26.6 billion in royalties compared to Australia’s $800 million take.

The International Transport Workers’ Federation-commissioned research found customers like Japan appear to benefit more than Australia from Australian LNG at a national government level.

Japan’s petroleum and coal tax applies to imports at a rate that equates to $22 a tonne of Australian LNG.

The levy was raised in 2012 from 1080 Japanese Yen per tonne to 1860 per tonne under a new rate known as the “special provision for tax for climate change mitigation”.

Tax Justice spokesman Jason Ward said: “This is a national scandal. As it stands, the Japanese government collects more direct tax on Australian gas than we do. Our five new offshore LNG projects are selling their gas overseas at a premium price when Australia is suffering from a domestic shortage. This needs to change and the public won’t stand for our natural resources being given away for free.”

Mr Morrison is awaiting the findings of a PRRT review by former Treasury executive Michael Callaghan amid calls for the introduction of a flat royalty on production to replace the existing profits-based system.

Fairfax Media sought comment from Mr Morrison.

When he announced Mr Callaghan’s review, the Treasurer conceded that in relation to the PRRT: “We think it is a problem.”