Why Labor and the Coalition fear David Pocock’s gas inquiry

Last week, Senator David Pocock proposed a Senate inquiry into the “extraordinarily low rates of revenue Australians receive from the export of our gas resources.”

The motion was supported by the Greens, independents and One Nation, in line with public opinion across the political spectrum. Labor opposed it, and the Coalition could have supported it, but didn’t even show up to vote. So, the motion failed.

There is no question that the “extraordinarily low rates of revenue Australians receive from the export of our gas resources” is stunning and an issue of enormous national importance because Australians are missing out on billions of dollars of potential revenue every year.

Australia is one of the largest gas exporters in the world, with our governments allowing the export of over 80% of our gas. And yet:

• No royalties are paid on over half the gas exported from Australia, meaning the gas companies effectively get this gas for free.
• As of 2023, no gas export project had ever paid petroleum resource rent tax (PRRT), despite windfall profits to the gas industry of around $100 billion over the last few years. The PRRT is the main tax on the oil and gas industry and has been in place for almost 40 years.
• Some companies still pay no corporate tax despite receiving billions of dollars every year selling Australia’s gas. For example:
  • Santos Limited has racked up a 10th straight year of zero corporate tax payments from a total of nearly $47 billion in sales.
  • Darwin’s Ichthys LNG Pty Ltd paid zero corporate tax for the 6th year from a total of $43 billion in sales.
• Australian beer companies pay more in beer excise than the gas industry pays in PRRT.
• Australians continue to pay much more in HECS repayments than gas companies pay in
• Australians get a fraction of the return of other gas exporting countries like Norway and In 2023 the Qatari Government received $A56 billion, while Australian governments received just $11 billion for roughly the same amount of gas.

So why would Labor and the Coalition oppose an inquiry into an issue of such national importance?

The simple answer is that they share responsibility in both grossly mismanaging the sale of Australia’s gas resources, allowing a handful of mostly foreign owned oil and gas corporations to rip off the Australian community for decades.

The Government’s job is to get the best deal possible for Australians for the sale of gas resources. They have clearly failed in this responsibility.

But it goes beyond the failure the collect sufficient taxes and royalties. They have also allowed these multinational companies to price gouge Australians for our own gas.

Before the Queensland and Australian Labor Governments foolishly approved the three massive gas export projects in Queensland, the eastern states of Australia had an abundant supply of low-cost gas.

When these governments approved the projects in 2010, it was entirely foreseeable that gas prices in Australia would become linked to global prices that were several times higher than Australian prices at the time.

When this happened, and gas prices tripled within a couple of years, successive governments, Labor and Coalition, failed to act effectively.

Part of the problem is that whenever the Government considers policies to deal with the issue, it enters into lengthy “consultations” with the gas industry, leading to compromises that let the gas companies off the hook.

Last year, the ACCC reviewed the impact of all the Federal Government policies introduced to address issue; the Gas Market Code (Gas Code), the Commonwealth Heads of Agreement with LNG exporters (HoA) and the Australian Domestic Gas Security Mechanism (ADGSM).

It concluded that this decade worth of gas policies had “not made a material difference for local users.”

This has caused Australian gas prices to triple and electricity prices to double, (electricity prices are largely set by gas prices), costing Australian households and businesses untold billions of dollars in higher energy bills, much of which has gone straight to the bottom line of the same gas companies.

The Coalition Government’s review of the PRRT did virtually nothing to improve the situation. In 2022 the Labor Government made further changes, again with little effect. It is hard to estimate how many billions of dollars of potential revenue Australians have missed out in the meantime that could have funded better housing, schools and hospitals.

The secrecy around government interactions with the gas industry means that we can only guess why our elected representatives have failed us so badly on this issue. But one thing we can say with certainty is that many of our politicians are too close to the gas industry.

Several former Australian resources and energy ministers have walked straight into plum jobs with the gas industry immediately after leaving politics. Beyond Ministers themselves, there is a revolving door between the gas industry and ministerial offices, creating a veritable swamp of conflicts of interest.

Our governments also seem to prioritize the interests of foreign counties over Australians on this issue. Australian ministers bend over backwards to assure Japanese gas companies their export projects will not be effected by Australian Government policies even though even though Japanese companies on-sell more gas than they import from Australia, making over $1 billion in profits doing so in 2024 alone, while Australians are told we face shortages.

Our governments are meant to represent the interests of Australians, not the interests of multinational oil and gas companies. Australians deserve to understand why our governments have mismanaged our resources so badly for so long. It is well past time to shine a light on the dealings between our elected representatives and Big Gas.