Australia's Labor party-led federal government has urged the Liberal-National coalition opposition to back changes to the three-decades old Petroleum Resources Rent Tax (PRRT), which it said is backed by the industry and will produce greater returns from the offshore sector.
Proposed changes to the PRRT would limit the percentage of taxes able to be avoided through deductions for expenditure on offshore project development to 90pc each year. Australia's treasury has forecast the changes would net an extra A$2.4bn ($1.6bn) in government tax revenue over the next four years.
But the government would accept a coalition demand by moving to streamline approvals for major resources projects, as part of changes to the Environment Protection and Biodiversity Conservation (EPBC) Act, which will include a federal Environmental Protection Agency, federal treasurer Jim Chalmers said in Sydney on 11 March.
The federal government will clarify requirements for offshore oil and gas storage regulatory approvals to ensure consultation is more targeted and effective, Chalmers said, while improving upfront guidance to developers on what approvals will be needed, to enable more certainty. Any changes to the EPBC Act will not apply retrospectively to projects under way, Chalmers confirmed.
The government has pressured the coalition to back the PRRT, as without its support it would be forced to negotiate with the Greens party, which opposes fossil fuel extraction and has called for a lower deduction threshold.
The Australian Energy Producers lobby group, formerly the Australian Petroleum Production and Exploration Association, has backed the tax changes as striking a balance between budget pressures and certainty for industry.
But the opposition, which has demanded streamlined approvals for gas projects as a condition for its backing of the changes, is unlikely to respond before a key paper is released. The legislation containing the changes has been referred to the Australian Senate's Economics Legislation Committee, with a report due by 18 April.
The federal government has also promised to reform offshore development laws to simplify the consultation requirements needed to progress environmental plans, after domestic independents Woodside and Santos were hit with delays to key projects in recent months.
