Frackers are slackers: $94 million in subsidies to onshore gas in the Territory


Research published today (Tuesday May 12) by The Australia Institute highlights the extent of taxpayer assistance to the onshore oil and gas industry in the Northern Territory. 

NT Government budget papers reveal that over the last decade $94 million in subsidies and assistance measures have benefited the industry. 

Key findings:

  • The NT Fracking Inquiry recommended industry fees should cover growing administration expenses. The government’s process is “still at the planning stage”.
  • Unrecovered administration costs totalled at least $33.6 million.
  • Subsidised exploration and industry promotion cost at least $60.4 million.
  • Instead of funding the onshore oil and gas industry, this money could have paid the salaries of 104 nurses, 94 teachers or 94 Aboriginal health practitioners.
  • Royalties are unlikely to ever cover these costs according to the Fracking Inquiry economic assessment.

“The onshore oil and gas industry is a leaner, not a lifter in the Northern Territory,” said Rod Campbell, report author, economist and Research Director at The Australia Institute. 

“Territory taxpayers pay far more to the onshore oil and gas industry than they receive from it. 

“This was a finding of the NT Fracking Inquiry and this research puts a figure on the value of this assistance – $94 million over ten years. 

“This is a significant cost for the NT Government at a time when it is facing budget pressure.

“These costs make it harder for the NT Government to fund schools and hospitals. This money could have paid the salaries of around 100 nurses or teachers.

“Economic analysis commissioned by the Fracking Inquiry found a ‘very high probability’ that unconventional gas in the Territory will never pay royalties. 

“That finding was before the corona virus pandemic hit oil and gas markets and delayed NT fracking projects, with costs that industry analysts describe as ‘ridiculous’. 

“The NT Government should be winding back these subsidies, but instead it has earmarked $5m per year to ‘pursue’ new gas projects. This is a significant new subsidy to the NT’s onshore gas industry. 

“The NT Government is also pushing ahead with feasibility studies on new gas infrastructure. This is astonishing given that NT taxpayers recently subsidised the Northern Gas Pipeline and Blacktip projects via $4.4 billion in Power Water Corporation purchase commitments. 

“Given the pandemic will hit big NT industries like tourism and agriculture hard, the NT Government should immediately redirect gas industry assistance to industries that actually deliver for Territorians. 

“The Territory economy doesn’t need a subsidised gas industry that divides communities and poses risks to the environment.”

Public Health Association of Australia Associate Professor Suzanne Belton said, “For any Territorian who has had to wait for hours to see a health professional, or slept in a corridor of a hospital because there was no available bed or watched nurses scramble through their shifts with more patients than they can care for, this report into where your money goes will be enlightening.

“For those Territorians who have to have heart surgery due to rheumatic heart disease or tie themselves to a dialysis machine three times a week due to their chronic illnesses caused by poverty and over-crowded houses, this report may make you weep.

“Not only does oil and gas steal your money that could be invested into preventing and treating ill health, but mining oil and gas contribute to climate warming which will cause severe problems for you and your children.” 

Protect Country Alliance spokesperson Dan Robins said, “This report reveals what many Territorians have long suspected; that fracking in the Northern Territory is not only dirty and dangerous, but also a drain on the taxpayer.”

“Earlier this year during the Johnston by-election voters were promised that Territory Labor would ensure no more public funds or subsidies for fracking companies. Clearly, this promise has been broken.

“The NT Government should come clean with voters before the NT election in August, admit the fracking industry has been given too much public funding, and refuse to waste one more taxpayer dollar on this destructive, uneconomic industry.”

Please note: This report was updated on 25 June 2020 to include changes to petroleum industry fees that came into effect on 1 January 2020. No difference is made to headline figures. See discussion in footnote on p7. Thanks to Keld Knudsen from Australian Petroleum Production and Exploration Association (APPEA) for this assistance.

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