'Spectacularly Ill-Advised': Australia's Energy Sector Slams Gas Tax Proposals

The Australian energy sector has vehemently rejected proposals for a new gas export tax and an increased petroleum resource rent tax (PRRT), labeling them 'spectacularly ill-advised.' Representatives from major industry players, including Shell Australia, presented a united front during a parliamentary inquiry, warning that such measures would deter international investment, compromise the nation's energy security, and damage crucial trading partnerships. This strong opposition comes despite arguments from proponents who believe Australia is not receiving its fair share of wealth from its abundant natural resources.

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Spectacularly ill-advised

Shell Australia chair Cecile Wake articulated the industry's concerns, drawing parallels with the UK's experience. She pointed to the 'energy profits levy' introduced in 2022, which, according to Shell, resulted in a significant contraction of investment in the UK continental shelf. Wake presented forecasts showing a dramatic drop in projected investment from £14.1 billion per annum to £2.3 billion per annum following the tax's introduction, a stark warning for Australia's own resource sector.

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The cumulative effect of windfall taxes has been a measurable contraction in UK continental shelf investment activity.

Adding to the controversy, Shell Australia confirmed it paid only $109 million in PRRT last year on profits of $2.5 billion before tax, and crucially, zero dollars in the preceding decade. This revelation, alongside the disclosure that the industry has funded a multi-million dollar campaign against the proposed tax changes, fuels the debate. The industry argues this campaign is necessary to 'counterbalance the very selective and misleading representations' made by social commentators and proponents of the tax. From Australia's perspective, this debate is critical, balancing the desire for greater resource revenue with the need to maintain investor confidence and ensure long-term energy supply and economic stability.

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Shell paid $109m in PRRT last year and another representative from Shell, Coralie Trotter, said the company's profit that year was $2.5 billion before tax.