Australia should resist the temptation to change a key petroleum super profits tax, said the head of the country’s largest independent gas producer on Wednesday, as the government considers a range of reforms to boost revenue in its May budget.
The centre-left Labor government is mulling changes to raise the take from a decades old Petroleum Resource Rent Tax (PRRT) which it sees as not delivering enough revenue.
Receipts are forecast to peak around AUSD 2.6 billion (USD 1.75 billion) in the year to June 2023 and then decline despite years of new projects and record commodity prices.
Woodside Energy Group Chief Executive Meg O’Neill said “overreaching” on tax reform could undercut future revenue and choke off the investment needed to increase supply.
“Our message to the government is what is important for us is (to?) hold the course. Stay with the framework we have.”
Treasurer Jim Chalmers said on Monday he had received a report commissioned by the former government on potential changes to the PRRT but the government had not finalised a position.
Macquarie analysts estimated changes in the May budget could reduce Woodside‘s valuation by 2% to 5%, in a client note on Monday.
The prospect of higher taxes is a blow to the gas industry, already facing several new rules, including price controls, tougher carbon emissions limits, and more government leeway to redirect liquefied natural gas (LNG) exports.
Industry warn the changes would imperil long-term contracts, stop new investments and alienate major trade partners like Japan or South Korea.
Australia needs “fiscal and regulatory certainty” to attract new investment, added O’Neill, not “arbitrary market interventions.”
