Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Hansard source

The North West Shelf actually does not yet pay excise on condensate, because at this stage we have not passed this bill. So essentially you are saying that, after this bill is passed, there will be one project in Australia that will pay excise on condensate and that is the North West Shelf gas project. How can the government get away with this assertion that somehow they are closing a loophole? It is just not accurate.

When we in the Senate inquiry met in Canberra one Treasury official said, ‘I don’t know what all the fuss is about in terms of sovereign risk, because for future projects this will not apply.’ Future projects will be subject to the PRRT. Future projects will be able to deduct all of their allowable exploration expenditure and other capital expenditure plus compounding. Some of them will not pay the PRRT for at least five to 10 years and, according to Commonwealth officials, some might never pay the PRRT.

The PRRT was introduced in recognition of the very capital intensive nature of oil and gas projects. It was introduced to ensure that marginal projects were able to get off the ground. It took some pressure off in the early stages of the project. They would pay their fair share of secondary taxation as the projects became more profitable. This is the core difference between what applies to every other offshore gas project and what applies to the North West Shelf gas project. The North West Shelf gas project waived this entitlement that exists today to have an easier tax burden in the early stages in exchange for some benefit down the track. You are hitting them twice. It is eminently unfair.