Australia’s great gas giveaway

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from The Australia Institute

Around 80% of Australia’s gas is exported as liquefied natural gas (LNG), the gas industry pays ZERO royalties on more than half the gas exported.

Australia has an abundance of gas. In fact, Australia is one of the biggest exporters of gas in the world, alongside Qatar.

Australia Institute research shows over half (56%) of gas exported from Australia attracts zero royalty payments, effectively giving a public resource to multinational gas corporations for free.

It’s time the gas industry started paying its fair share.

Gas in Western Australia

The Australia Institute – gas royalties billboard

90% of WA’s gas exported by foreign owned companies who get most of the gas for free.

The WA Government is expected to receive $522 million in royalties from the gas industry in 2024-25, down from $660 million in 2023-24, and will contribute just 1.3% to state government revenue.

This is less than half of the $1.319 billion expected from vehicle registration fees, up from $1,263 billion in 2023-24.

The gas industry also pays little in federal tax – the combined tax payments of Chevron, Exxon, Woodside and Shell raise less money than beer excise.

Just 0.7% of the state’s workforce is employed in oil and gas extraction.

In the current skills shortage, new gas projects will divert jobs from other industries rather than create additional jobs.

Gas in the Northern Territory

If the NT were a country it would be the highest per capita polluter in the world, far higher than even petrostates like Qatar, Saudi Arabia or Brunei – mainly due to its massive export gas industry. Yet Territorians receive few benefits from the gas industry, which is a small employer, a systematic non-payer of tax and crowds out other industries.

The Northern Territory is facing a wave of gas mega-projects. But gas development has few economic benefits beyond those that flow to the gas industry itself. In fact, NT drivers pay 30 times more in vehicle registration than the gas industry pays in royalties.

Australia Institute analysis shows the benefits of gas development in the NT have been overstated.

Key points

  • Gas projects lead to poor social and economic outcomes for local communities.
  • The gas industry is a small employer, employing less than 1 job in 100 (or 0.7%) of the NT workforce, and around 0.2% nationally. In other words, 99% of Territorians don’t work in the gas industry.
  • The Northern Territory Government is misrepresenting headline economic figures on gas development.
  • Australian governments charge no royalties on 56% of the gas that is exported from Australia, which includes all the gas exported from the Northern Territory.
  • Over the last four years, multinational companies made $149 billion exporting gas they got for free including $37 billion from the NT. If royalties had been charged on this gas, at least $13.3 billion ($3.4 billion from NT) in revenue could have been raised

 

How Australia and the Northern Territory give gas to multinational corporations for free
by Mark Ogge, Rod Campbell and Piers Verstegan

AUTHORS

Mark Ogge

Principal Advisor

Rod Campbell

Research Director

Piers Verstegan

MEDIA RELEASE

NT motorists pay 32 times more in rego than the gas industry pays in royalties: New research

According to the Australian Government’s Future Gas Strategy, gas is “critical” to the nation’s economy. In view of this, many Australians might be surprised to learn that a large amount of the country’s gas reserves are essentially being given away for free.

The wording of the Western Australian Government’s fact sheet on petroleum resources exemplifies the way in which the country’s resources are described to the public:

“Petroleum resources are owned by the community and a royalty is a purchase price for the resource. The community expects a fair return for the loss of its non-renewable petroleum resources.”

This rhetoric does not reflect reality. While the community might expect a fair return for the loss of its resources, in many cases it gets no return at all, fair or otherwise.

Australia has ten facilities that export gas as liquified natural gas (LNG). Six of these projects—both of the Northern Territory’s facilities and four of the five operating in Western Australia—pay no royalties, either state or federal. These facilities represent 56% of Australia’s gas export capacity. This means that all the gas exported from the NT, and more than half the gas exported from Australia, is given for free to the companies exporting it.

The monetary value of this gas is enormous. The total value of LNG exports over the last four years is estimated at $265 billion Australia-wide, $37 billion of which was exported from the NT. All of the NT’s LNG exports were royalty-free and Australia’s royalty-free exports totalled $149 billion. To put this another way: in the last four years alone, Australians have given away the gas that made $149 billion worth of LNG, for free.

The billions of dollars in forgone revenue each year from effectively giving away Australian gas for free could be invested in a sovereign wealth fund (as it is in Norway) or used to raise productivity and increase living standards of Australians by funding schools, hospitals, renewable energy, and other needed public infrastructure.

The gas industry does not make a fair contribution to the community. The Australia Institute recommends:

  • A comprehensive inquiry into the mismanagement of Australia’s gas resources;
  • The application of a royalty to all gas produced in Australia.
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