Crossbenchers to back Labor’s resources tax changes if deductions cap for ‘greedy’ gas companies is cut

Crossbenchers to back Labor’s resources tax changes if deductions cap for ‘greedy’ gas companies is cut | Australian politics | The Guardian

Senate crossbenchers will back the government’s petroleum resource rent tax changes in exchange for a cut to the allowable deductions cap, an update the Greens say would raise $2.6bn in revenue.

The changes to the PRRT would sail through the Senate with the support of the Greens, the Jacqui Lambie Network and David Pocock if deductions cap is reduced from 90% to 80%, under a crossbench compromise offered to the government. Greens senator Nick McKim has written to the treasurer, Jim Chalmers, urging Labor to entertain their idea rather than seeking Coalition support.

“That gas companies will contribute so little, while so many in the country are enduring a cost-of-living crisis represents an unacceptable missed opportunity,” McKim wrote.

The government’s PRRT proposal to limit the proportion of income that can be offset by deductions to 90% and bring forward the date that liquefied natural gas projects are expected to pay the tax was forecast to raise $2.4bn in tax over four years.

The gas industry welcomed the changes, but some analysts, including former ACCC chair Rod Sims, said it would deliver little if any additional revenue.

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The Coalition offered its support on the PRRT in exchange for reduced regulation and faster approval of new gas projects. The Greens called for stronger reforms and accused the government of writing a “sweetheart deal” for gas giants.

McKim wrote to Chalmers on Monday, offering the support of the Greens for the PRRT if the deductions cap was lowered to 80%, increasing the minimum revenue that gas projects would be assessed against. This figure was among the options presented to Chalmers by the Treasury in a May review.

“The decision now rests with you and your colleagues,” McKim wrote to Chalmers.

“You can double the proposed additional revenue from gas companies through working constructively with the Greens and Senate crossbench, or settle for half that amount in exchange for weakening environmental approvals for gas projects to the satisfaction of the Dutton opposition and gas corporations.”

McKim said Pocock, Lambie and fellow member of her party, Tammy Tyrrell, would back the same reform, giving the government the necessary numbers in the upper house to pass the reforms.

Spokespeople for Lambie and Tyrrell confirmed their support for the 80% change. Guardian Australia understands Pocock backs the Greens’ proposal but would prefer even stronger updates to the scheme, by increasing the rate of the PRRT.

The Greens pointed to parliamentary budget office advice that lowering the deductions cap would increase government revenue by $2.616bn.
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In a statement, the Greens leader, Adam Bandt, claimed gas companies “can afford to pay a little bit of tax while the rest of the country struggles through a cost-of-living crisis that gas companies are profiteering from”.

“I have no doubt that given the choice, most Australians would choose to double the tax take from greedy gas companies rather than weaken their environmental approvals in exchange for less public revenue compared to what the crossbench is putting on the table,” he said.

In parliament’s question time on Monday, independent lower house MP Monique Ryan described the PRRT changes as “undercooked” and urged Chalmers to enact “a fair and progressive tax on fossil fuel”.

The treasurer said the government intended to proceed with its design of the PRRT, saying their changes raise the most money over the forward estimates of the three options presented by the Treasury.

“Whether it’s the improvements to the bulk-billing incentive, whether it’s the cost-of-living assistance that is rolling out right now, that $2.4bn will make a substantial contribution to that,” Chalmers said.

“We want to see the offshore LNG industry pay more tax sooner. We’ve come up with a way with the help of the Treasury and, on the recommendations of the Treasury, to ensure that we can do that while protecting our international relationships and protecting the jobs in the sector and recognising that gas will play a role as a transition fuel as we embark on this net zero transformation.”