Major changes to the petroleum resource rent tax could net $94.5bn for the federal budget over a decade, according to an independent costing made for the Greens.
The Parliamentary Budget Office advice, released on Saturday, adds to pressure on the Albanese government to reform the tax in order to address the budget’s $50bn-a-year structural deficit.
On Wednesday the treasurer, Jim Chalmers, confirmed Treasury is working on options to reform the PRRT, suggesting it could be the next revenue measure to repair the budget after Labor’s “modest but meaningful” changes to halve superannuation tax concessions on balances of more than $3m.
But the Greens have signalled they will use their Senate balance of power to toughen the government’s PRRT proposal by calling on it to eliminate $284bn of accumulated credits that allow gas companies to reduce their tax liability.
The PRRT is a 40% tax that has failed to raise significant revenue because of concessions for the expense of exploring and developing gas fields, which can be carried forward and deducted as tax credits against future liabilities.
Unlike company tax, credits that are carried forward under the PRRT have been permitted to rise by between 5% and 15% above the long-term bond rate, allowing gas companies to accumulate $284bn in credits.
The Greens want to wipe out all of the gas industry’s carried-forward tax credits, meaning all gas companies will need to start paying the tax from 1 July after new legislation and apply a 10% royalty to all offshore projects that are subject to the tax.
The budget office estimated the measures would raise $33.8bn over four years or $94.5bn over 10. It said there was a “significant degree of uncertainty” in the estimate due to factors including “expected behavioural responses to the proposal”.
“It is possible that some projects would close sooner than they otherwise would. This is because the proposal would reduce the post-tax return on projects, possibly making them unviable.”
The Greens leader, Adam Bandt, said “it’s time to make big gas corporations pay their fair share of tax”.
“Greedy gas corporations are taking Australia for a ride, making billions of dollars in profits and sending it offshore tax free,” he said.
“Australia’s gas tax is broken and many multinational corporations pay no gas tax at all. When a nurse pays more tax than a global gas giant, something is seriously wrong.”
The Greens resources spokesperson, Dorinda Cox, said “Chevron is Australia’s biggest LNG producer and owns 47.3% of the Gorgon project, Australia’s worst industrial carbon polluter” but the company was still “years away from paying any PRRT”.
“Changes to the PRRT and the application of a 10% royalty to offshore projects like Scarborough and Barossa should send a clear message to investors that Australia is no longer a petrostate and these climate-destroying projects have no place in our renewable future.”
In a report released this week, the Grattan Institute found that changing the method of pricing for gas could raise $3bn to $4bn a year and introducing a 10% commonwealth royalty on offshore gas a further $4bn.
On Wednesday Chalmers said “the Treasury is working through options when it comes to the PRRT tax on gas”.
“So there is some common ground in that report,” he said, agreeing with “the overall point … that we do have a structural issue in the budget”.
Chalmers pledged to find “the best combination of trimming spending and redirecting it to areas which are more important to us, some sensible tax changes, whether it’s multinationals or superannuation, and spending restraint so that we can make our budget as resilient as it can be”.
