“I think the government is of a mind to make changes right now,” Wood said. “It was a crazy thing in the first place and should have been addressed earlier.”
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Wood said while the gas industry “will obviously feel that any changes are terrible”,public opinion backs tighter regulation on fossil fuels,which will eventually be replaced bythe rise of renewable energy.
Wood said one option for government was to alter the settings to deliver greater returns over the next decade or more,but require companies to pay the majority of their future tax bill sooner to boost the budget bottom line.
“They[government] might bring forward revenue that would at least theoretically not be collected for some years,” he said.
“The government could argue you’re going to have to pay anyway,but we want it now.”
In a speech to the National Press Club last month,Woodside chief executive Meg O’Neill said “overreaching” on tax reforms could risk undermining future revenue.
“We urge the government,in any changes to the tax framework,to consider the long term and preserve Australia’s ability to attract the next generation of investment,jobs and energy supply,” O’Neill said.
Australian Petroleum Production and Exploration Association chief executive Samantha McCulloch said the gas industry was already paying more to government and will nearly triple the sector’s tax payments within 12 months to $16 billion this financial year.
Significant reforms to the PRRT could net the federal budget $94.5 billion over the next 10 years,according to Parliamentary Budget Office modelling conducted for the Greens.
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Greens leader Adam Bandt said he was concerned Labor’s proposed changes would be timid,and fail to make gas companies pay their “fair share of tax”.
“This is the best chance we’ll have in a generation to make these corporations actually pay the gas tax,” Bandt said.
A hike to the PRRT would follow a long list of extra regulations imposed on the industry. The government in December set a$12-a-gigajoule cap on the price of domestic gas sales,imposed a mandatory code of conduct for the industry,set compulsory emissions cuts under the safeguard mechanism,and tightened rules under the Australian Domestic Gas Security Mechanism to redirect exports back to Australia if supply runs short.
Rick Wilkinson,chief executive of Adelaide-based consultancy EnergyQuest,said hiking the PRRT,combined with other market interventions,could raise Australia’s “risk profile” and discourage much-needed international investment in both traditional fuels and renewables.
“Projects needed to get to net-zero are going to cost eye-watering sums of money and rely on overseas capital,” Wilkinson said.
“We need to understand that these are multinational energy companies who are involved in gas as well as renewables,and they will make note of how they are treated with foundation contracts and foundation projects.”
Cut through the noise of federal politics with news,views and expert analysis from Jacqueline Maley.Subscribers can sign up to our weekly Inside Politics newsletter here.