Ken Henry at the Senate committee yesterday. Image: Screenshot.
Former Treasury secretary Ken Henry has told federal parliamentarians to “stop the crap” and raise the tax on gas companies in the national interest.
Giving evidence during the first hearing of the Senate select committee into the taxation of Australia’s gas resource on Tuesday (21 April), Dr Henry said raising the tax would have negligible impacts on Australia’s trade partners, but would be of huge benefit to the Australian public.
“Just do it. In the national interest, just do it and stop the crap the Australian public has put up with for decades now,” he said.
Stressing that he was now “liberated” to speak in his personal capacity as an economist, and not a government employee, the former Treasury boss said the Petroleum Resources Rent Tax (PRRT) wasn’t cutting it.
“The Petroleum Resource Rent Tax does a bit, it’s true, but that’s the point,” he said.
“It does such a tiny bit that people should be embarrassed to use that as an argument for not changing the taxation arrangements … Those resources are the property of the people of Australia. They sit on the national balance sheet.
“I put this proposition to you – I’ll sell your house, and I’ll give you 30 per cent, and keep the other 70 per cent, and you should be happy with that, because I’ve just converted an asset into cash.
“None of you would be stupid enough to do that. Yet that is what the Australian Government and the Australian parliament do in respect of our gas reserves.”
The Greens-chaired inquiry is examining the case for a 25 per cent export tax, which has found growing support within parliament and from unions and climate groups.
The Federal Government is even facing internal pressure to raise the taxes on gas companies, with Labor Environment Action Network (LEAN) giving evidence to the inquiry that it would like to see a better return for Australia’s gas resources.
“I would say that within the Labor membership, there is support for better returns to the Australian taxpayer,” LEAN’s national secretary Janaline Oh said.
Labor backbencher Ed Husic is a strong supporter of a 25 per cent export levy on gas companies, saying the companies currently enjoy an “obscenely sweet deal” under the PRRT.
Independent ACT Senator David Pocock has been pushing for the levy for some time, saying Australians pay more tax on beer than international gas companies pay on the tens of billions of dollars worth of offshore gas they export.
“Australians want a fair return on our gas exports now,” Senator Pocock posted on social media.
“The PRRT was supposed to capture windfall profits from our resources — but gas giants have gamed it so effectively that we collect more tax from beer excise than from LNG exports.
“A windfall profits tax still lets ‘systemic non-payers’ of tax use the same tricks to minimise their tax. We need something simpler and stronger: a 25 per cent revenue tax on every dollar of gas exported from Australian shores.
“No loopholes. No deductions. Just a fair return for Aussies on resources that belong to all of us.”
The PRRT raised $1.6 billion in 2023-24, whereas Australian Council of Trade Unions modelling suggests a flat 25 per cent export levy would have raised $17.1 billion.
The gas companies are obviously opposed to the tax and they have an ally in Opposition Leader Angus Taylor, who said on Tuesday that the proposal would shut down the industry.
“There is a proposal around a 25 per cent tax which would close down the gas industry and that is the intent of that tax,” he said.
Asked directly about the proposal during an ABC interview on Tuesday, Finance Minister Katy Gallagher suggested the government was not considering the levy.
“Our policies on that haven’t changed,” she said.
She also said Australia’s relationship with energy-reliant neighbouring countries was an important priority for the government.
“Strengthening international partnership with our nearest neighbours and providing certainty to them is as important as providing certainty to us, around some of the needs that we have around fuel supply and fuel security,” the minister said.
“Those international commitments are important.”
Chair of the committee, Greens Senator Steph Hodgins-May, pointed to strong community support for the 25 per cent tax.
“The breadth and depth of community support for taxing gas exports is so large that there is now a clear political risk for the government if they don’t tax gas exports in next month’s budget,” she said.
“With people palpably frustrated with their living standards going backwards while gas companies make out like bandits during the war, this is the best chance for a gas export tax that the country has had for a very long time. “
The inquiry continues hearing evidence this week in Canberra and Perth.
Original Article published by Chris Johnson on Region Canberra.
