Russia’s illegal invasion of Ukraine caused a massive surge in gas and LNG prices that have enabled gas companies around the world, including Australia to make record-level profits.
But none of these profits have come from either management decisions or productive investments. The price rise has not come from any economic improvements. No, they have come only from an illegal invasion that is causing great human misery.
Labour market and fiscal policy director Greg Jericho notes research suggests that the gas sector has accrued around $26bn in profits due to price rises affected by the Russian invasion. He argues that all of these profits should be garnered in taxation – a view that echoes that of former Treasurer Secretary Ken Henry.
This revenue would be enough to cover the cost of rewiring the nation and greatly assist the tradition to renewables.
But the problem of revenue are much deeper than the need for a windfall profits tax.
Jericho’s analysis of industry data reveals that the industry pays much less company tax relative to production than it did in the past.
Had the industry paid the same level of company tax relative to revenue that is had in the decade prior to the opening of the Gladstone port, in 2019-20 alone, an extra $9.1bn in tax revenue would have been raised.
Oil and gas are Australia’s resources. Not only are their emissions causing climate change but the profits are largely headed overseas, and more than in the past not flowing through into taxation.
As Australians demand better and wider government services, and the costs of dealing with climate change grow ever higher, we need to ensure the fossil fuel companies pay their rightful share.