The letter, published in the Sydney Morning Herald, The Age, The Canberra Times, and The Courier Mail, comes ahead of today’s release of the Senate Inquiry report into the government’s proposed reforms to the PRRT. Australia Institute analysis shows that these reforms fail to deliver any meaningful economic benefits and do not meet community expectations for tax reform.
Key findings
- Over the past five years, PRRT revenue has averaged $1.2 billion a year – 3.6% of petroleum revenue, which has averaged $34 billion per year over that time.
- Any revenue gains from Federal Government’s proposed 90% cap on the expenses oil and gas companies can deduct from their PRRT payments will be effectively wiped out by inflation and a decline in PRRT tax receipts (by $2.4 billion) over the next four years.
- Forecasted revenue from the PRRT (from 2023-24 to 2025-26) is now lower than what was estimated in the 2022-23 October budget and before the cap was even proposed.
- In contrast to Australia, Norway (which produces a similar amount of gas), has created a sovereign wealth fund now worth A$1.9 trillion through taking a greater proportion of gas and oil revenue.
“We are in a climate emergency, driven in large part by the burning of fossil fuels. Our tax system must take that into account and calculate the true impact of burning fossil fuels on our environment, our communities, and our economy,” said Clover Moore, Lord Mayor of Sydney.
“In the City of Sydney, everyone is susceptible to climate change through extreme weather events like heatwaves, severe storms and flooding, and the impacts of bushfires, including poor air quality and disruption to transport.
“We have had to create infrastructure that is resilient to climate change: planting 16,000 trees to create shade; building a $140 million drain to mitigate flooding in Green Square; and investing in mobile cooling hubs for our most vulnerable.
“We should be phasing out fossil fuels completely, but in the interim, they must be taxed appropriately. This revenue is urgently needed to help councils prepare for, withstand, and adapt to climate change,” Ms Moore said.
“Budgets are about choices. The PRRT has the potential to be a major revenue source for the Federal Government, however current arrangements mean it collects less revenue than tobacco or beer excises, or even than is paid in HECS repayments,” said Greg Jericho, Chief Economist at the Australia Institute.
“The PRRT – and the government’s amendments – do not go far enough to ensure that the gas industry pays a fair share of tax. The proposed 90% cap is so trivial that the industry welcomed it.
“Effective PRRT reforms would provide important revenue for public services and to help Australian communities on the frontline of the climate crisis.”
