The proposed changes to the PRRT as contained in Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023 deliver returns to taxpayers that are well below community expectations and do little to alter the current reality that gas companies are failing to pay a fair level of tax under the current PRRT regime.

We argue that the government should:

• Adopt a stricter cap of either 60% or 80%, or
• Reform the PRRT regime to ensure any windfall gains are taxed.

Our polling demonstrates that stricter caps would have much greater support than the 90% proposed. The concern that any changes to the cap would continue to play into the hand of the oil and gas industry accountants however could be countered by reforming the PRRT so that whenever the rate of return on the funds employed exceeds a certain threshold the liability would be triggered. This supports our recommendation that the government pursue a PRRT regime that would ensure any windfall gains are taxed, given such gains are not expected or included in investment decision taxing them would not affect investment decisions.

These recommendations would also meet the demands of the more than 10,000 people who have signed the Australia Institute petition calling for the repair and increase of the PRRT to address this imbalance and ensure the Australian people get a fair share of the windfall profits from our own natural resources.

The aim of the government should be not to shift PRRT return from a later period to earlier, but to deliver bigger returns, always.

Given the great needs within the community for stronger government services, infrastructure and benefits, the government needs to be able to raise more revenue to fulfil spending commitments into the future.

Given the role the oil and gas industry in producing emissions that lead to rising temperatures and climate change, we also argue the government has a moral responsibility to ensure that the industries which are causing the most damage to the climate pay a greater level of taxation given the large costs required to transition the economy to net zero.

Recently, Professors Rod Sims and Ross Garnaut of The Superpower Institute proposed a “carbon solutions levy”, which they estimate would raised in the order of $100 billion in its first year. Such a level of revenue should be the amount the government is contemplating. In such a context the average $600 million extra revenue estimated to be raised by these proposed changes to the PRRT is woefully inadequate.