Australian politicians keep telling us how smart the electorate is, but there is a whole bunch of evidence to prove this assertion is utterly false.
Take the gas companies making billions out of selling Australian gas overseas. The table below shows the total income tax paid by six of these companies between 2014 and 2020….NIL!
This is despite the fossil fuel companies’ advice (before they receive the licences they need to extract the filthy stuff), that they will contribute billions of dollars to the national economy. But these promises have not come to fruition. However, it hasn’t stopped the Federal Government from continuing to give them what they want and the electorate has continued to ignorantly support the Federal government in these energy initiatives. Now we have a plethora of new projects approved including the vast Beetaloo Basin fracking project, with local indigenous communities and a few pastoralists the only ones fighting it.
In 2019-20, (whilst Angus Taylor was Energy Minister) the fossil fuel industry earned $115 billion from selling Australia’s petroleum and coal resources and paid state and federal governments an estimated $7.3 billion in royalties.
One year later in 2020-21 (whilst Angus Taylor was still Energy Minister), the industry received more than $10.7 billion in subsidies, according to a report released by The Australia Institute based on state budget papers.
It appears that federal and state governments pay billions of dollars more in subsidies to multinational fossil fuel miners than those companies pay in royalties to governments.
In a research report for the Neroli Storytelling Colvin Foundation, Michael West Media calculated that powerful mining lobby Minerals Council of Australia and its experts from Deloitte had exaggerated tax and royalties payments by $45 billion over ten years. The report found a return of less than 10% to the owners of the minerals on $2.1 trillion in mining exports. Those owners are the Australian public. After deducting subsidies, we are had a zero return.
In the meantime, we, as consumers are paying 44.2 cents per litre of fuel at the bowser to the Australian government. Big deal if there is a temporary reduction.
It is unbelievable how stupid the electorate is to let the politicians get away with this.
Further, thanks to a change in legislation regarding the Petroleum Resources Rent Tax (PRRT), which covers LNG exports, Australia now receives less in PRRT payments than it did 20 years ago even though petroleum export revenues have soared by more than $50 billion.
Labor’s minister for resources Martin Ferguson presided over a number of the legislative changes which allowed gas extractors to avoid tax before he retired from politics and became a fossil fuel lobbyist. Ferguson is one of many former politicians in the fossil fuels lobby.
In 2019, the last year for which we have royalties data, the multinational fossil fuel miners paid an estimated $7.3 billion in royalties. Most of the revenue, some $5.4 billion, came from coal; petroleum royalties amounted to just $1.8 billion.
Yet the value of coal exports was $54.6 billion while petroleum exports were 10% higher at $60.2 billion. Petroleum extractors paid royalties, including PPRT payments, of just 2.9% on their export revenue in 2019.
So why do the petroleum companies which operate in Australia get away with such small royalty payments compared to their coal colleagues?
In Australia, all royalty schemes for mineral commodities are operated by states and territory governments. The one significant exception is offshore petroleum, which is the sole jurisdiction of the federal government.
Up until 1987 there was no system to ensure multinationals paid royalties for offshore petroleum. The Hawke government introduced the PRRT to ensure the public received a fairer payment in return for access to the resources. However, the PRRT has failed to deliver this.
Bruce Robertson, an analyst with the Institute for Energy Economics and Financial Analysis, describes the PRRT as “a broken tax”. He says that most countries with resources such as Australia build the wealth of their nation through royalty payments.
“These resources are non-renewable. There should be long-term sovereign wealth funds for future generations because they’re going to be left with huge clean-up bills from the projects.”
Revenue from the Petroleum Resource Rent Tax has declined since 1999 despite a 990% increase in revenue from petroleum exports.
Multinationals can choose the price that one entity sells the gas to another subsidiary before it is processed and turned into liquids for export. So they can sell gas to themselves at a lower-than-market price to reduce taxable income and PRRT.
Furthermore, significant tax credits can be accrued during the offshore exploration phase and losses can be deducted against profits elsewhere. Efforts to address the faults in the scheme, including by parliamentary inquiries, have dismally failed amid lobbying by APPEA and other fossil fuel associates.
These tax deductions are not capped, and they grow every year, calculated by a method which is arbitrary and favours the industry, so a producer will not pay any PRRT until all the capital deductions are exhausted.
For example, the oil and gas industry’s largest project, Chevron’s $70 billion Gorgon LNG facility, will pay nothing for the gas it extracts, while the Northern Territory’s Ichthys project will export $195 billion worth of LNG, LPG and condensate from Darwin over the next three decades yet will pay zero PRRT.
The Australian electorate are mugs.
And let’s not the forget the ill-effects of fracking on our fragile water table. And let’s not forget the price of adaptation as the earth warms by 2 degrees plus because of the impacts of burning the filthy stuff, or the rehabilitation costs that miners are walking away from.
The Australian electorate are mugs.
And now energy prices are going to skyrocket because of the rising price of gas, when we could have been immune from this if we had of placed a priority on developing our renewables market. Meanwhile the fossil fuel companies will get even richer.
The electorate is not smart, it is really really dumb, and we will get what we deserve.
We may not be the only dumb bastards though. Around the world coal, oil, and natural gas received $5.9 trillion in subsidies in 2020, or roughly $11 million every minute according to the International Monetary Fund. And climate change doesn’t stop at borders either.