How your spiking energy bills are making foreign investors rich

Angry about the sudden and astronomical rise in the cost of Australian gas? You should be.

Not only is it hitting household budgets directly and escalating costs to local business, it also is a major contributing factor in the recent spike in electricity prices.

Ordinarily, there would be some consolation in knowing our hard-earned cash was going to a good home, where at least it was being used to build a future for the next generation.

It is quite possible that is the case. Unfortunately, that home is not here.

Most of the windfall profits being earned at the moment — courtesy of Vladimir Putin’s invasion of Ukraine — are being funnelled out of the country because Australia’s oil and gas resources are overwhelmingly exploited by global multinationals.

In fact, there’s barely any local equity involved.

According to a new study by The Australia Institute, Australians have just 4.3 per cent ownership in the companies extracting and processing natural gas across the country — from the North-West Shelf, across the inland, to Bass Strait and north Queensland.

Given the vast amounts of capital required to extract, process and export oil and gas, you’d expect the major energy multinationals to be at the forefront of developing these massive projects.

The tragedy, however, is that not only is there minimal Australian ownership involved — which means most of the dividends flow offshore — but also that most of these corporations pay no tax.

The majority have never paid any tax and, in some instances, have made it clear they never will.

Despite promising billions of dollars in tax and royalty revenues while seeking regulatory approval, a combination of accommodative tax regimes on our part and tax avoidance strategies have allowed them to extract vast profits in recent years while contributing almost nothing to the nation.

A map of Australia from the Department of Industry, Science, Energy and Resources
Source: Department of Industry, Science, Energy and Resources

The no-tax regime

Back in 2015, US petroleum giant Chevron reckoned it would be making huge annual contributions to Australia’s tax base as its expansion of oil and gas fields off the northern coast of Western Australia gathered pace.

That never happened. Within two years, it had suffered a humiliating defeat in the Federal Court after the Australian Tax Office exposed what had been one of the oldest tricks in the tax-avoidance handbook.

The US parent was borrowing cash, at about 2 per cent, and lending it on to the Australian subsidiary at about 9 per cent, ensuring all profits from the local business were being shuffled out of the country.

Its most recent set of accounts show it still hasn’t paid a cent in corporate income tax.

When it comes to paying tax, or rather not paying, it’s not alone.

Shell — which has large stakes in most of Western Australia’s major new LNG fields, along with outright ownership of one of the three big exporting facilities off the coast of Gladstone in Queensland — has paid no income tax since 2015.

In fact, an analysis of the ATO database shows that five of the gas industry’s biggest operators haven’t paid any income tax for the past seven years.

Posted , updated 

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