16 May 2012
Australia’s oil and gas industry must be prepared to answer hard questions about its future, which will be made all the more difficult as the Gillard Government’s double tax burden comes into effect, Shadow Minister for Energy and Resources Ian Macfarlane said.
Mr Macfarlane today warned delegates at the 2012 APPEA conference in Adelaide that they would face increasing popular sentiment for a domestic gas reservation policy as the Government’s carbon tax began to hit household budgets and the Minerals Resource Rent Tax (MRRT) is slapped on local investors.
“Within a matter of weeks the Gillard Government’s carbon tax will be in effect, imposing on Australian energy consumers the highest carbon price anywhere in the world,” Mr Macfarlane said.
“State-based electricity authorities have already advised that this will have a direct impact on electricity bills. As prices go up, calls for compulsory reservation of gas reserves for local use will get an even more sympathetic audience from families and business under financial pressure.”
Mr Macfarlane said during almost a decade of direct involvement with the energy and resources portfolio, he had heard persistent calls for a domestic gas reservation policy.
“There are significant dangers in interfering with the gas market and mandating the reservation of gas, not least of which is the distortion of the price signal and undercutting the competitiveness of Australian gas projects,” Mr Macfarlane said.
“It also threatens Australia’s sovereign risk status, because by mandating that a certain percentage of gas in projects already in production or development is set aside for domestic sale, the rules of the game for investors are changed midstream.
“The oil and gas industry has already borne the brunt of a series of Rudd/Gillard Government decisions that have undermined Australia’s sovereign risk profile – including the carbon tax, Kevin Rudd’s disastrous Resources Super Profits Tax, the watered down MRRT and the tax slug on condensate.
“It cannot absorb yet another deterioration in Australia’s status as an investment destination for energy and resources projects.
“The energy and resources sector has been essential in helping guide Australia through the worst of the global financial crisis and it continues to offer significant potential for future investment and development.
“But this growth, revenue and new jobs can’t be taken for granted.
“As the oil and gas industry prepares to tackle serious questions about its future it requires more from the Gillard Government than a confused and often destructive policy agenda.”