Australia is going to be just a little better off with a small but significant change to tax legislation introduced to the House of Representatives last week, something for which Pauline Hanson has been campaigning for many years.
We’re known as ‘the lucky country’, a phrase coined by author Donald Horne, but it wasn’t a compliment. It was an indictment on the idiots running the country who allowed our vast natural mineral and energy resources to be exploited for the price of a song. We’re lucky only because we can still make money from being a cheap dirt mine. Raw mineral and energy exports still underpin much of our economy, as they have since the 1840s.
We could have been so much more. Instead of exporting iron ore and coal, we could have turned it into steel and manufactured goods to export at much higher values. Instead of exporting bauxite, we could be exporting refined aluminium. Australia sits on some of the largest reserves of ilmenite and rutile in the world, but we don’t refine a single gramme of titanium.
But even without this sort of first-order value-adding and sovereign industrial capability, successive Australian government squandered opportunities to put in place a tax regime which ensured we got a fair return for the exploitation of our natural mineral and energy wealth.
Norway has a sovereign wealth fund developed from its oil resources in the North Sea that today is valued at more than $2.25 trillion, holding an average stake of 1.5% in all the world’s publicly listed companies. It’s more than $400,000 for every Norwegian.
Australia has mineral and energy resources that dwarf those of Norway, but past governments have squandered this opportunity. Natural gas is a good example. Australia is the world’s largest exporter but receives at most about $300 million a year in federal government revenue from this industry. Qatar, the world’s second-largest exporter, makes $26 billion a year.
Pauline has for years been calling for changes to the Petroleum Resource Rent Tax (PRRT) to achieve more government revenue from natural gas exports, and she personally spoke to Anthony Albanese about it last year. We conservatively estimate that substantial reform could result in revenue of up to $30 billion. Finally, it seems, the government has listened.
The Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023, which is yet to come before the Senate, includes a change to the PRRT which will make companies exploiting our natural gas on the North West Shelf pay more tax sooner by limiting the proportion of their income which can be offset by deductions. It will raise a modest $2.4 billion over the next four years.
As Pauline noted in her Budget reply speech back in May, it’s a small step in the right direction. A very small step, but a significant one in that it will effectively triple the annual taxpayer return on our natural gas exports. As far as Pauline Hanson is concerned, this is just the beginning – a small victory on the road to tax reform to create national and individual prosperity and a progression from being the ‘lucky country’ to the ‘clever country’.