Multinational companies are making gigantic super-profits from the export of liquefied natural gas (LNG), yet have paid little taxes or royalties to Australian governments. Meanwhile, the people face cut-backs in government services, a virtual wage freeze and ever higher utility bills.
By 2020 Australia will become the world’s biggest exporter of LNG, overtaking Qatar. But unlike Qatar, Australia will have little to show for the plunder of its enormous energy reserves.
From its production of 100 billion cubic metres of LNG, Qatar currently picks up $26.6 billion in royalties. For a similar amount of gas, the Treasury estimates the Australian government will get a miserable $800 million! This massive betrayal of Australia’s national interests demonstrates the abject collaboration of the local ruling class with the corporate beneficiaries of imperialism.
Two recent reports, an investigation by Fairfax Media, and a report by the Auditor-General, have thoroughly exposed the extent of this rip-off.
The Fairfax Media report on the Petroleum Resource Rent Tax (PRRT)
The Fairfax report investigated the application of the PRRT by the federal government on the oil and gas industry. This sector is dominated by multinational ventures off the Western Australia coast and coal seam gas (fracking) in Queensland and NSW. It uncovered the shameful information that just 8 out of 149 resource projects paid any PRRT in the year 2014-15, in spite of collective revenues in excess of $25 billion!
The PRRT is structured to tax only “super-profits” and is not a royalty based on the amount of oil or gas extracted. Companies can then write off their exploration and construction costs to reduce the amount of tax due and carry forward this credit for years to come. According to the Tax Office figure obtained by Fairfax Media, these tax credits are now worth $187 billion.
Gorgon, off the Western Australia coast, is the largest LNG plant in the world and is owned by US multinational Chevron. Last year the Federal Court of Australia had to chase this profit-bloated company for a piddling $300 million in tax avoidance.
The Auditor-General’s report on royalty payments
The report revealed that the whole structure of the royalty system is a rort which allows the oil and gas monopolies to use slick accounting to claim massive deductions, while the government regulators turn a blind eye.
Auditor-General Grant Hehir investigated the royalty payments from the North West Shelf, jointly owned by Woodside, Shell, Chevron and BHP Billiton. This crew had racked up $5 billion worth of tax deductions in just 18 months! And a few more interesting facts finally came out:
- The ‘self-assessed’ royalty payments had not been audited for 17 years!
- A gas meter to measure gas output and the royalties owing was broken five years ago!
- The Royalty Schedule was 10 years out of date!
- The Western Australian government hired Ernst & Young to check the royalty deductions in 2014, never mind the inconvenient fact that the same firm is official auditor for North West Shelf!
Wishy washy governments
Greens senator Peter Whish-Wilson, one of the few in parliament with the guts to call out the truth, made a positive statement that reflects the disgust and anger of the working people when these rorts are uncovered. "They have been trying to penny-pinch from backpackers and some of the lowest-paid workers in the country, and yet they have been blind to potentially multi-billion-dollar rorts from massive multinational corporations.
"It looks like Australians might be being fleeced for hundreds of millions in dollars in oil and gas royalties because Liberal and Labor Governments have either been asleep at the wheel for the last two decades, or they don't see tackling their big corporate backers as a priority.
"These aren't your traditional tax avoidance issues that Parliament has been looking at over recent years. This is about successive Australian governments not even checking if billions of dollars in tax deductions were allowable under law. This is about a government department not even testing the meters on the oil and gas wells to see if they were working."
While the gigantic gas tankers cart Australian LNG across the world, the domestic market is starved of cheap gas. Working people are told that “we have to” pay ever-increasing international prices for the domestic gas we use for heating and cooking. Why, if the country has such abundant supplies? Answer – to boost the profits of the greedy multinationals who couldn’t give a stuff for people in Australia.
And it is not only the workers who will cop it. Small manufacturing business and commercial bakeries are already feeling the pinch.
For example, Victoria Wool Processors in Melbourne's western suburbs are unable to finalise a new source of natural gas to heat and process their annual 12,000 tonnes of wool. General Manager David Richie stated, "Australia has just become the biggest exporter of gas in the world. If you believe in manufacturing, this needs to be sorted out quickly... Gas is obviously widely used in industry and it's critical for the plastics and chemicals industry, the paper industry, fertilisers, the production of a host of products." He pointed out that 40 jobs at his plant were immediately at stake unless a more rational system was introduced.
The “Last One” ceremony
Another icon of Australian manufacturing bit the dust on the 29th November when the last Holden car rolled off the production line at Fisherman’s Bend. And the last 175 workers got their reward for loyalty and years of hard work – a free lunch, a polo shirt, a yearbook and a group photograph – and the sack!
Imperialism – expose it, resist it, defeat it!
This is the future imperialist domination has for Australia – grab the resources, grind down the working class, dismantle the skills and industries and drag us into endless dirty wars! The corporate bandits are supported and encouraged by a miserable gang of local politicians, bank and finance bosses, media lackeys and shadowy ‘think-tanks’, all backed up by the armed state apparatus.
This not a future the Australian people want. They want to control the destiny of their own country, to apply its natural resources in sensible and planned way to benefit the people, to roll back climate change and repair environmental damage, not make it worse. They want viable, stable jobs that produce useful products and services, not just holes in the ground and short-term contracts. This can only happen in an independent Australia republic when the key industries are owned and controlled by the working people.
Nationalise the power industry!