It’s taken a while for Labor to be dragged, very reluctantly, to the idea that the risks of doing nothing on energy company profits might outweigh the risks of taking action.
Despite a wide variety of observers (and the Greens) suggesting a windfall profits tax on energy exporters — or fixing the petroleum rent resource tax (PRRT) — is important not just fiscally but for encouraging voters to endure the pain of higher energy prices, until last week Treasurer Jim Chalmers has stoutly resisted fixing what is currently the most expensive tax rort in Australia: the failure of big gas exporters to pay sufficient, or in many cases any, tax or royalty while they make tens of billions in profits.
Informing Labor’s reluctance — such a contrast to its welcome, gung-ho approach to industrial relations reform — is its experience last time it brought on a windfall profits tax on the extractive sector. It’s one Chalmers saw up close and personal in then treasurer Wayne Swan’s office as the resource super profit tax (RSPT) plunged the Rudd government into a world of trouble and contributed to the removal of Rudd himself.
Things are a little different now: these are fossil fuels, not iron ore; these companies are paying tuppence in tax while consumers and other businesses pay through the nose for gas; major manufacturers are facing the real threat of closure; and Andrew Forrest is now an avowed enemy of the gas lobby. But the same malignant forces that derailed the RSPT — News Corp, The Australian Financial Review, the extractive sector and its well-funded and well-staffed lobby groups (including the federal Coalition, the biggest resources industry lobby group of all) — would assemble again, and journalists will again begin using that great cliché “a mining tax-style ad campaign”.
That Chalmers is now flagging possible changes to the patently inadequate PRRT regime isn’t thanks to the corporate media. Only smaller outlets like Crikey, Michael West Media and industry publications have been pointing out how useless the PRRT is and the bizarre fact that last week’s budget showed PRRT revenue falling despite a mammoth spike in gas export prices. Nonetheless, well done to the press gallery for finally working out that something is wrong with the way we tax fossil fuels.
Bear in mind, though, that the only reason anything is on the agenda is that Josh Frydenberg — remember him? — asked Treasury to continue work after a review of the PRRT by right-wing economist Mike Callaghan, which led to some marginal prospective changes in the rules around the treatment of capital costs by the previous government. Meaning that, as of right now, the Coalition is responsible for what minimal movement there has been to fix the PRRT.
As with the RSPT and its successor, however, the risk is that significant changes take so long that windfall profits are long in the rearview mirror by the time the changes kick in. Any change to the PRRT will likely not commence until the 2024-25 financial year at the earliest, meaning the likes of Santos, Woodside, Chevron and Shell will keep tens of billions in war profits generated since January.
And any worthwhile changes will elicit screams of sovereign risk, deterring investment and all the garbage we were served up routinely by the AFR and News Corp more than a decade ago.
And yet, try telling voters they’ll just have to cop much higher energy prices while those companies make a fortune and hand out massive rewards to their executives. And all while the climate emergency accelerates. Chalmers might want to ask Treasury to finish that review ASAP.
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Rudd didn’t do enough groundwork before introducing a very complicated tax. I would think that most people can see that we are being ripped off by companies who make huge profits and don’t pay tax on what is our resource not theirs. Should be relatively easy to get that message out, News Corp notwithstanding.
But jeez, that would require effort! And an avoidance of that well-known ALP affliction, “the pre-emptive buckle”, proudly adorning every ALP belt in the Federal parliament!
See why the EU has been under constant attack, inc,. Brexit, for past decades…. whiff of shared oil influence in US, west, Russia etc.
it’s not rocket surgery – Labor just plays it straight:
“Australians and Australian businesses are doing it tough. It’s time the fossil fuel industry paid their share, instead of gouging the taxpayers who actually pay for the infrastructure that supports them.”
and repeat, and repeat, and repeat …
The point should also be made that these are our resources ie: our gas/coal/oil for which we are paid next to nothing.
Just for a change a Labor government should challenge News Corp – the latter will never be their ally so Labor need not self-delude & make efforts to stay on side.
Sorry mate, it’s Brain Science… and that’s different.
Surely selling the argument that gas is a national resource from which the public should be entitled to benefit, rather than enabling windfall corporate profits, should not be too difficult.
It’s sold already. Just deliver and install it!
I was dismayed at the time to see Rudd lose his initial fire on this issue. He had all the good arguments on his side, Ken Henry was with him. He was up against Mitch Hooke who was an outstanding communicator on behalf of the Minerals Council. I always felt that Hooke was a gun for hire, but that deep down, he could see the merit of Rudd’s case.
Rudd could have won then if he maintained the pressure and held his ground and developed and refined his rhetoric.
What went wrong?
Jeez, tough call. The ALP possibly going to water on an issue after encountering some pushback from Mudrake? Nah, that’d be so weak wouldn’t it? Cripes, they could also have a cut-back of fossil-fool money! Now that REALLY hurts!
Face it. It has NOTHING to do with or without the merits of the case in politics.
The miners learned how easily politicians fold after Hawke and the Native Title legislation episode. Come out with all guns blazing – works every time.
I suspect that it will be “Not in this case”.
The Dirty Fossils have got no friends on this money grab.
Why would they want, never mind need, ‘friends’ when they have a pocketful of politicians, ready & eager to do their bidding?
If Labor does not do something to address energy prices, they will be utterly destroyed at the next election. Though the consequences of their immigration policy will probably doom them even if they do.
Few are going to abide by wages and living standards being rewound decades, no matter how bad they think the other side is.
The Labor Party was blindsided by the LNP withholding the electricity increases prior to May 22.
I am sure that the Labor Party is merely allowing the Dirty Fossils time to work out for themselves how to supply the nation at a reasonable cost, because I don’t think that this Labor Government is going to take the insolence for long, and they have many ways of causing them to suffer.
As for immigration, I suggest you consider that the ATM government wasted billions in being cruel to asylum seekers, whilst chocking the door open for human trafficking. A disgusting discovery, enabled by the immigration agent / privatized visa processing system.
There is nothing in Labor’s behaviour before or since the election to suggest this is their plan. They’ve had the opportunity to stand up to the fossil fuel industry and instead let it write their policy for them. They will be dragged kicking and screaming to a temporary solution – probably enriching fossil fuel even more through subsidies to power bills – if at all.
The problem with our immigration policy is that it’s geared towards large volumes of low-skilled and easily exploited workers to suppress wages (a model Labor has been in full support of). Labor recently had an opportunity to try and change this direction with their “Job and Skills Summit” but instead chose to double down on it by increasing the overall cap and working hours for foreign “students”.
Labor have never been more aptly described as “LNP Lite” in their history as right now.