THE Queensland Resources Council (QRC) has called on the Palaszczuk Government to delay the implementation of any gas royalty increase to January 1, 2020 to allow industry and Government to work through confusion in the draft legislation.
“As it currently stands, the 25% increase in gas royalties on domestic and export gas will damage industry viability and increase costs to the electricity and domestic processing and manufacturing sectors,” QRC chief executive Ian Macfarlane said.
“Increasing the cost of gas to Queensland businesses puts their viability and jobs at risk. Of particular concern is the retrospective introduction of the royalty increase to 1 January, 2019 which will be passed through as an additional charge to gas consumer companies which have already produced and sold their electricity and goods.
“The gas industry understands its role in delivering returns for all Queenslanders, but the shock tax increase announced in this week’s budget will undo all the benefits Queensland has secured by being the only East Coast state to develop its own gas.
“We’re calling on the Premier and the Treasurer to hold off on any royalty increase until January 1 2020, instead of rushing it through the Parliament and adding to the existing confusion on domestic gas royalty impacts.
“Currently, the legislation for the gas royalty increase risks pricing Australian LNG exports out of the international market and perversely making domestic gas more expensive for industry users here in Australia," Mr Macfarlane said.
"At the very least there should be an exemption for gas sold on the domestic market. We’re calling on the Treasurer to make that commitment as soon as possible.
“Queensland is the only East Coast state producing new gas resources to supply the domestic market. Given production in the Bass Strait is declining, that means Queensland gas will be more important than ever.
“At the height of the East Coast gas supply squeeze, the ACCC said transport costs from Queensland to southern markets were already adding at least an extra $2 a gigajoule to the price for domestic users.
"Even though the price of gas has since come down from those peaks at which domestic users were being offered contracts at about $20 a gigajoule, nothing can reduce transport costs.
“Adding on the extra 25 percent royalty tax will mean more expensive gas for export and more expensive gas for domestic users.
“The QRC looks forward to meeting with Premier Palaszczuk and the Treasurer as soon as possible to address these significant concerns with the legislation.”