Speaker 1: I'm Daniel James and you're listening to seven AM. Australia
Speaker 1: is one of the biggest exporters of liquefied natural gas
Speaker 1: in the world. Over the past twenty five years, the
Speaker 1: value of those exports has grow more than twenty four
Speaker 1: yet revenue from the tax designed to capture the extraordinary
Speaker 1: profits from petroleum resources has gone backwards. Now this week,
Speaker 1: at its national conference, the Labour Party has formally acknowledged
Speaker 1: that Australians deserve a fairer return from the resources beneath
Speaker 1: their own soil and seas, but the party stops short
Speaker 1: of backing a policy that forced the issue onto the
Speaker 1: agenda in the first place, a twenty five percent tax
Speaker 1: on gas exports that supporters say could raise up to
Speaker 1: seventeen billion dollars a year. Today, the Australian Institute co
Speaker 1: Chief executive Richard Dennis on the unlikely alliance pushing Labor
Speaker 1: to take on the gas industry and whether the party's
Speaker 1: carefully chosen words who ever become an actual acts. It's Saturday,
Speaker 1: July twenty five. Richard. You were at the LP national
Speaker 1: conference this week. What was the vibe like at the meeting?
Speaker 2: Ah? I think there was a there was a lot
Speaker 2: of excitement, a lot of Labor members who hadn't seen
Speaker 2: each other for a long time, been a while since
Speaker 2: there's a national conference, So there was definitely a lot
Speaker 2: of a lot of good will in the room, but
Speaker 2: at the same time, variously frustration and disappointment that the
Speaker 2: good old days where you could have a staush and
Speaker 2: that people could see the competing arguments and that people
Speaker 2: might even see the result shift because of the strength
Speaker 2: of public argument, that those days seemed to be behind well,
Speaker 2: not just Australia but Labor Party and the way they
Speaker 2: want to organize their conferences. So people talk about grassroots,
Speaker 2: people talk about the base. Well, this is the grassroots
Speaker 2: and this is the base. And they wanted to talk
Speaker 2: about gas, to talk about gaza, they wanted to talk
Speaker 2: about gambling, and the big kids were saying, calm down, Feller,
Speaker 2: the Prime Minister doesn't want a distraction. Lots of people
Speaker 2: had different priorities, but between them they couldn't agree on
Speaker 2: what to force on the party as a whole.
Speaker 1: One thing that the National Conference this week agreed to
Speaker 1: was to put a commitment in the party platform to
Speaker 1: secure Australians a quote vera return from natural resources through
Speaker 1: appropriate taxation arrangements. It didn't endorse the twenty five percent
Speaker 1: gas export tax being pushed by unions and some labor INPs.
Speaker 1: So can you strip that language down for us? What
Speaker 1: is labor actually agreed to by using that language and
Speaker 1: putting forward that commitment.
Speaker 2: Look, what they've agreed to do is to make it fairer.
Speaker 2: I think the two letters do a lot of work
Speaker 2: in that sentence. So look, it's a statement of intent,
Speaker 2: it's a statement of direction of travel. But by definition
Speaker 2: you know that language has no timetable and it doesn't
Speaker 2: have a destination. So what I think it is is,
Speaker 2: you know, quite a big public nudge from the party
Speaker 2: to the parliamentary wing. Come on, do better, try harder,
Speaker 2: negotiate harder, take the pain, go get a better deal
Speaker 2: for Australians and you'll have to force those foreign owned
Speaker 2: gas companies to pay more. So, to be clear, the
Speaker 2: twenty five percent export gas export tax is the act
Speaker 2: u's formal position. The ACTU executive have adopted that the
Speaker 2: affiliate unions are broadly behind it, the left and right
Speaker 2: blue collar unions are supporting it, The service sector unions,
Speaker 2: the white collar unions are very supportive because they know
Speaker 2: that the only way teachers and nurses are going to
Speaker 2: get a pay rise is if the government collects enough tax.
Speaker 2: The NDIS sector knows it's going to get huge carts
Speaker 2: unless the government can find new sources of revenue. So
Speaker 2: it's united the left and right of the union movement.
Speaker 2: It's united the blue collar and the white collar of
Speaker 2: the union movement. It's certainly got the branches excited. But
Speaker 2: the Prime Minister knows how to manage a labor conference.
Speaker 2: He managed to avoid what he might think of as
Speaker 2: a messy debate about it. But you know, I think
Speaker 2: miss is what democracy looks like.
Speaker 1: Well, yeah, I mean I missed the coverage from the
Speaker 1: good old days of the old labor conferences where they
Speaker 1: were just blues in the floor. He went to make
Speaker 1: great viewing. But that's another.
Speaker 2: Point, including by Elbow, including by.
Speaker 1: Elbow in his various forms. Jim Charman's on seven point
Speaker 1: thirty the other night told Sarah Ferguson the reason why
Speaker 1: gas tax has not been on our a vendor is
Speaker 1: because we've got other priorities.
Speaker 2: Whether it's reservation, the PRRT changes I've already made or
Speaker 2: making sure that we are reliable international supplier.
Speaker 1: That's the government's focus. How far down the priority list
Speaker 1: do you think it is for this government? And how
Speaker 1: much hope do you hold out that this will become
Speaker 1: part of their election platform in twenty twenty eight.
Speaker 2: Look, you know hope is not a strategy. But you know,
Speaker 2: in my experienced, pressure works. So everywhere the Prime Minister goes,
Speaker 2: someone says, how you say we have to tighten our belts,
Speaker 2: why don't we tax gas instead? The question when will
Speaker 2: they act on it? Well, that's their political judgment. But
Speaker 2: to give you an historical example, in Labour's first term,
Speaker 2: the Australian Institute and the other and a lot of
Speaker 2: other groups really pushed hard for changes to the Stage
Speaker 2: three tax cuts, and for two and a half years
Speaker 2: I got told, oh, come on, Richard, he said he
Speaker 2: won't do that, that's never going to happen. He's all
Speaker 2: that out. And then he did it and the lead
Speaker 2: up to the twenty twenty five election, which he won
Speaker 2: in a landslide. And while I've spent years saying it's
Speaker 2: obvious you should do it, the Prime Minister got the
Speaker 2: timing spot on. So what do I think is going
Speaker 2: to happen this term. Well, the pressure is not going
Speaker 2: to go away. Every week we delay this tax costs
Speaker 2: US three hundred and fifty million dollars every week. We
Speaker 2: are foregoing three hundred and fifty million. We estimate seventeen
Speaker 2: billion dollars a year in revenue. And you only get
Speaker 2: to sell the gas once, you only get to tax
Speaker 2: it once. I'm not suggesting that he'll inevitably do it,
Speaker 2: but I reckon if he does it, he'll do it
Speaker 2: before the next election, because to be clear, there's a
Speaker 2: very real threat that if he doesn't do it, a
Speaker 2: Liberal party led by Andrew Hasty or some conservative politicians
Speaker 2: are going to see the same political opportunity to put
Speaker 2: Australians first. And this is really important. The first party
Speaker 2: in Australia to say I will have a fight with
Speaker 2: foreign gas companies so that you can have higher quality services,
Speaker 2: the first party to do that is going to get
Speaker 2: all the lolligs and everybody else is going to get
Speaker 2: sucked into their wake. So just like as soon as
Speaker 2: Labor did the Stage three tax cuts, the Liberals came
Speaker 2: out and backed it. If Labor came out and said
Speaker 2: we're going to tax gas and make childcare free, or
Speaker 2: tax gas, you know, drop hex or tax gas and
Speaker 2: give everyone a pay rise. If labor came out and
Speaker 2: did that, the liberals have got nowhere to go. One
Speaker 2: nation's got nowhere to go. But if one of those
Speaker 2: other parties do it first, well you know that's a
Speaker 2: real risk for labor. And Hasty has already said he
Speaker 2: supports the idea coming up.
Speaker 1: Why the gas companies are so good at minimizing their tax, Richard,
Speaker 1: gas companies have been paying relatively little for years. Could
Speaker 1: you just take us a step back and explain what
Speaker 1: Australians currently received when gas is extracted and exported.
Speaker 2: Yeah, look, Australia exports about the same amount of gas
Speaker 2: as Qatar, and Qatar collects about five times more tax
Speaker 2: than US. Other countries know how to tax the gas industry. Well,
Speaker 2: the problem in Australia is we have this thing called
Speaker 2: the peace RRT, the Petroleum Resource Rent tax. And there's
Speaker 2: a hint in the name. We invented this policy decades
Speaker 2: ago to tax oil that got turned into petrol. That's
Speaker 2: why it's called the Petroleum Resource Rent tax. And it
Speaker 2: was just never designed to tax something like liquefied natural
Speaker 2: gas exports. Now you know most people are sitting there
Speaker 2: and now going, oh, who cares, what's the difference between
Speaker 2: petrol and gas. Well, because of the complexity and how
Speaker 2: many stages there are in sucking out gas, shipping it
Speaker 2: to the liquefication plant, liquefying it, putting on a boat,
Speaker 2: all those steps allow for what's called transfer pricing, effectively
Speaker 2: tax minimization. So the simple reality is we collect more
Speaker 2: revenue from beer ex ice and HEXRA payments than we
Speaker 2: get from the PRT. That's how bad it is. The
Speaker 2: way it's set up. It's a profits based tax, not
Speaker 2: a revenue based tax, and the way that profit is
Speaker 2: defined is ea to manipulate. And it's particularly easy for
Speaker 2: the gas industry to manipulate the amount of profit they
Speaker 2: claim to make because any of the upfront costs that
Speaker 2: they incur are deductible against future profits. The end result
Speaker 2: is the gas industry are not breaking the law. They're
Speaker 2: just carrying forward all these kind of historic expenses and
Speaker 2: every year they get to go, nah, I know, I've
Speaker 2: shipped a lot of money back to the shareholders, but
Speaker 2: it's not a good year to pay prit if you've
Speaker 2: seen all these costs I carried forward. So that's why
Speaker 2: a simple export tax is now on their gender. You
Speaker 2: can't hide the total sales, you can't avoid it. And
Speaker 2: the only real way to avoid the export tax get
Speaker 2: this is to not export it. It's to actually supply
Speaker 2: more gas to Australians. So you actually fix this so
Speaker 2: called supply shortage by giving the gas industry an incentive
Speaker 2: to sell gas to Australians.
Speaker 1: So this is why the Australian Institutes supports a flat
Speaker 1: twenty five percent tax on the value of gas exports
Speaker 1: rather than based on company profits. The industry says this
Speaker 1: tax would drive investment away in ultimately of Australia with
Speaker 1: less gas. I guess they would say that, But what's
Speaker 1: the evidence that tells us whether that threat is actually credible.
Speaker 2: Yeah, Look, they get paid a lot of money to
Speaker 2: say that. They're not accountable for lying or misleading. It's
Speaker 2: they Indeed, they get a reward, they get a bonus
Speaker 2: if they if they talk Australians into this nonsense. But
Speaker 2: what's the easiest way to rebut it? Well, IMPEX is
Speaker 2: if we increase taxes, then they won't invest here anymore.
Speaker 2: But they're currently looking to invest in Norway, and Norway
Speaker 2: taxes a lot more than we do. But the other
Speaker 2: thing is they use the word investment in a way
Speaker 2: that confuses people. To be clear, if something's already been
Speaker 2: built here in Australia and they've spent billions of dollars
Speaker 2: building it, they can pull their money out of Australia.
Speaker 2: But the only way they can pull their money out
Speaker 2: of Australia is by selling that project to someone else.
Speaker 2: And the project stays here. So you know, I think
Speaker 2: this scare campaign implies or if they don't invest, we
Speaker 2: won't have any gas anymore. It's like no, no, no.
Speaker 2: To be clear, the gas is here, the gas extraction
Speaker 2: equipment is here, the liquefication project is here. I mean,
Speaker 2: it's a scare campaign. What's embarrassing is not that people
Speaker 2: fall for it. What's embarrassing is that our elected leaders
Speaker 2: seem to fall for it. You know, this stuff is
Speaker 2: a bit complicated, But if our government doesn't know that,
Speaker 2: they can't take their bat, their ball and their gas
Speaker 2: refinery and go home. If our government doesn't know that,
Speaker 2: that's embarrassing. So I don't blame the public for being
Speaker 2: a bit confused, But we actually need our Resources Minister
Speaker 2: and our Prime Minister to negotiate hard deals on our behalf.
Speaker 2: And you know, the Resource Minister speaks as if she
Speaker 2: represents the resource companies, talk about getting the brief wrong.
Speaker 2: It's the Resource Minister's to get the highest possible price
Speaker 2: for Australians for our gas. That's her job because we
Speaker 2: only get to sell it once. And the Norwegians know that,
Speaker 2: and the Kataris know that, and the Saudis know that.
Speaker 2: And we think that the foreign gas companies are doing
Speaker 2: us some sort of favor when they invest in the
Speaker 2: export equipment that they need to take our gas to
Speaker 2: their country. I mean, it's wild.
Speaker 1: So another ALP national conference is over now, Richard, and
Speaker 1: there is the promise, like we've mentioned, that there will
Speaker 1: be a fairer return on natural resources. Ed Hughesick says
Speaker 1: the campaign will survive the conference. What do you think
Speaker 1: do you think there are enough factions now within Labor
Speaker 1: to keep this issue alive and get the Treasurer and
Speaker 1: Prime Minister to embrace it eventually.
Speaker 2: I do, and I think it's in Labour's interest to
Speaker 2: do it, and I think the timing is important. Because
Speaker 2: if I can see it, they can see it. You know.
Speaker 2: Peter Dutton went to the last election saying when needed
Speaker 2: some form of gas export tax. Pauline Hansen says we
Speaker 2: need some form of gas export tax. To be clear,
Speaker 2: neither of them has proposed something as ambitious or as
Speaker 2: effective as a twenty five percent export tax, but both
Speaker 2: of them have made space for this conversation. Clive Palmer
Speaker 2: supports it. All those full page ads that you see,
Speaker 2: have a look. The first dot point is a twenty
Speaker 2: five percent gas export tax. So yes, it's true that
Speaker 2: the Prime Minister seems determined to kick this into the
Speaker 2: longish grass yet again. But it's also true that his
Speaker 2: party wants it, the members want it, the act you
Speaker 2: were calling for it. But it's also true that his
Speaker 2: political opponents can see the same political opportunity. And again
Speaker 2: the first party that shows Australians I will put Australians
Speaker 2: ahead of the interests of the foreign gas companies, They're
Speaker 2: going to pick up a lot of odes. And frankly,
Speaker 2: what better way to show us Australians that our democracy
Speaker 2: isn't broken and what better way to show Australians that
Speaker 2: our parliament can actually stand up on behalf of Australians
Speaker 2: than to make some foreign gas companies really sad. Indeed,
Speaker 2: the anger of the gas industry is the communications strategy.
Speaker 2: Look how angry they are because I made them pay
Speaker 2: you a fairer price for your resources. Now I can
Speaker 2: give you better aged care. Now I can give you
Speaker 2: cheaper childcare. Now I can cut your kids university fees.
Speaker 2: Like you know, call me old fashioned, but that sounds
Speaker 2: like good economics and good politics.
Speaker 1: I never call you old fashion, Richard. But thank you
Speaker 1: once again for coming on seven Am.
Speaker 2: Thank you.
Speaker 1: You can also read Richard Dennis's latest vantage Points I
Speaker 1: Say from Australian Stitchep Press titled more for Me Have
Speaker 1: the Gas Industry Tricked Australia? That'll be out next month.
Speaker 1: Seven Am was a daily show from Solstice Media. It's
Speaker 1: made by Aria Richards, Adigast Bastow, Chris Danegate, Crystal Kellor,
Speaker 1: Renee Auckland, Ruby Jones, Travis Evans, zoltanfit Joe Jr. And
Speaker 1: Me Daniel James. Our theme music is by Ned Beckley
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