Why is Australia giving away our natural resources for free?
By 2021 Australia will eclipse the Persian Gulf state of Qatar to become the world's biggest exporter of liquefied natural gas. In that year, Qatar's government will receive $26.6 billion in royalties from the multinational companies exploiting its offshore gasfields.
According to Treasury estimates, Australia will receive just $800 million for the same volume of gas leaving our shores.
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What is the PRRT?
The PRRT is the primary tax on all oil and gas production. The PRRT is a profit-based tax. It was initially designed to allow oil and gas companies to recover their investment while recognising that these resources belong to the Australian people. The tax rate on profits is 40%.
A decade ago the PRRT system worked reasonably well and collected a significant share of the revenues generated. Changes to the PRRT system have expanded loopholes and combined with aggressive tax avoidance, the effectiveness of the PRRT system has been gutted.
Generous tax subsidies built into the PRRT allow the oil and gas industry to accumulate billions in tax credits – and the value of these credits compound every year at rates as high as 18%. In 2015, the value of accumulated PRRT tax credits was nearly $190 billion.
If the PRRT was working the way it was originally intended, it would generate an additional $480 billion in government revenues over the next two decades. That amount would cover roughly 80% of the current annual national education budget over the next 20 years. This revenue, which could fund our public schools, hospitals and infrastructure, is being lost.