Analysts say Australia is effectively giving away more
than half of its gas reserves for free.
A new report by The Australia Institute shows multinational corporations are exporting liquefied natural gas (LNG) without paying any royalties.
This practice has substantial financial implications, as it involves a significant portion of the nation’s critical gas resources.
According to the Australian Government’s Future Gas Strategy, gas is deemed “critical” to the economy. However, the gas from six of the country’s ten LNG export facilities - comprising four in Western Australia and both in the Northern Territory - pays no royalties at either state or federal levels.
These royalty-free operations account for 56 per cent of Australia’s LNG export capacity.
The financial impact is enormous. Over the past four years, the total value of LNG exports is estimated at $265 billion.
Out of this, LNG produced from royalty-free gas was valued at $149 billion.
Essentially, Australia has given away gas worth $149 billion
to these companies without any financial return.
The Western Australian facilities alone contributed to $111 billion of this total.
The Australia Institute highlights the disparity in contributions from the gas industry compared to other sectors.
For instance, in the financial year 2020-21, major oil and gas corporations like Woodside, Exxon, Shell, Chevron, Inpex, and APLNG reported a collective income of $34 billion but paid no income tax. Despite a revenue surge to $56.3 billion in 2021-22, only $454 million was paid in company taxes.
By contrast, other resource sectors such as iron ore contribute significantly more.
The iron ore industry paid over $10 billion in royalties to the Western Australian Government alone in 2021-22.
International comparisons paint a stark picture too. Qatar, which produces 50 per cent more oil and gas than Australia, receives six times more in government revenue from its oil and gas industry. Norway, exporting less gas but more oil, expects tax revenue from its oil and gas sector to reach an astounding AU$127 billion in 2023 alone.
The Australia Institute suggests that the billions of dollars in forgone revenue could be better utilised.
These funds could be channelled into a sovereign wealth fund similar to Norway’s or invested in enhancing public infrastructure such as schools, hospitals, and renewable energy projects, thereby increasing living standards and productivity across Australia.
To address this issue, the experts recommend a comprehensive inquiry into the management of Australia’s gas resources, and the imposition of royalties on all gas produced in Australia.
While the gas industry reaps enormous profits, the Australian community sees little return from its non-renewable resources.
The potential benefits from proper management and fair taxation of these resources could significantly enhance national wealth and public services, promoting a more equitable distribution of Australia’s natural resource wealth.
