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In a dissenting report on the findings of a senate committee inquiry tabled today, ACT Independent Senator David Pocock has slammed the government for tinkering around the edges of tax reform for offshore oil and gas.

Senator Pocock has put forward three recommendations calling for an increase to the rate of Petroleum Resources Rent Tax (PRRT), a lower cap on deductions and an inquiry into the failure of successive governments to secure a fair return on the sale of Australian resources.

Senator Pocock also sharply criticised the government saying it was indefensible to roll together tax integrity reforms that arise from the PWC scandal with changes to the PRRT.

“It is unconscionable for successive Australian governments to effectively give our natural resources away for free to multinational oil and gas companies,” Senator Pocock said.

“The government cannot cry poor in next week’s federal budget while simultaneously foregoing a legitimate opportunity to raise fair revenue.\

“The PRRT changes proposed in this bill will not see any additional revenue raised.  

“This is an abject failure to achieve a fair return on Australian resources. 

“Having the government say it can’t afford to invest more in the things Australians urgently need in next week’s federal budget, from frontline family and domestic violence services to providing safety net payments that are enough to live on while oil and gas companies bank record profits is unacceptable.

“In 2022, export revenue for LNG was close to $93 billion. That equates to more than double the federal government education budget for the same period. 

“This is frankly a scandal whose enormity is obvious in the zero PRRT that has been paid on LNG exports. Equally concerning, four major gas producers - Exxon, Shell, INPEX, and Chevron - have not paid a single cent in PRRT on combined income of $297 billion over the 9 years to 2021-22.  And for those companies paying PRRT, the actual revenue take remains staggeringly small.  In 2022-23, PRRT revenue of $2.4 billion was less than the beer excise ($2.6 billion) and less than half the  HELP/SFSS revenue ($4.9 billion). 

“The industry’s avoidance of company income tax is no less scandalous, having paid just $782 million in company income tax in 2020-21 - or less than 1 per cent of its $89 billion income for the year.

“The scale of tax minimisation by the gas industry is laid bare through a comparison with Australian nurses. In 2020-21, Australia’s nurses paid $5.4 billion, while over the same period, the gas industry paid just $1.8 billion of tax  (company income tax plus PRRT). Meaning that nurses paid three times as much tax as the gas industry.

“Australians should be outraged by the dud deal governments have given them for decades.”

Senator Pocock’s recommendations are copied below, full report is available here:

Recommendation One

The rate of the PRRT should be increased.

Recommendation Two

The deductions cap in Schedule 5 should be reduced to 80 per cent or lower of assessable receipts.

Recommendation Three

The Senate should establish a Select Committee to conduct an inquiry to consider why there has been a failure of successive governments to secure a fair return on the sale of Australian resources.

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