tag:theconversation.com,2011:/africa/topics/resource-royalties-33430/articlesresource royalties – The Conversation2017-07-27T14:39:32Ztag:theconversation.com,2011:article/816322017-07-27T14:39:32Z2017-07-27T14:39:32ZAll bets are off as Magufuli’s resource nationalism moves up a gear in Tanzania<figure><img src="https://images.theconversation.com/files/179812/original/file-20170726-27705-ixjq27.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Tanzanian President John Magufuli has threatened to close all mines and give them to Tanzanians.</span> <span class="attribution"><span class="source">EPA/Daniel Irungu</span></span></figcaption></figure><p>The Tanzanian government has <a href="http://www.acaciamining.com/media/press-releases/2017/2017-07-24.aspx">asked</a> Acacia Mining, a subsidiary of the world’s largest gold mining company Barrick Gold, to pay approximately USD$190 billion in revised taxes, interest and fines. This latest development is a game changer in a <a href="http://www.theeastafrican.co.ke/news/Acacia-mining-arbitration-on-Tanzanian-contracts/2558-4000144-h13hjt/index.html">dispute</a> that pits mining companies against President John Magufuli’s government. It makes both nationalisation and mine closures more likely.</p>
<p>Until this revised tax notice was served, the overhaul of Tanzania’s mining regime had a great deal going for it. <a href="http://curtisresearch.org/wp-content/uploads/GoldenOpportunity2ndEd.pdf">Previous policy</a> had given miners an easy ride. Low taxes and generous license terms were sweetened by further <a href="https://www.theguardian.com/global-development-professionals-network/2017/jul/06/a-brutal-lesson-for-multinationals-golden-tax-deals-can-come-back-and-bite-you">tax breaks and exemptions</a>. </p>
<p>Tanzania’s <a href="http://www.tcme.or.tz/mining-in-tanzania/industry-overview/">mining sector</a> contributes nearly 3% to GDP annually. Tanzanite and diamond mines are scheduled to be joined by large uranium, coal and iron projects which are under development, but the largest operational mines produce gold. Acacia and AngloGold Ashanti run 4 large gold mines between them that extracted 37 tonnes of gold last year. According to the <a href="http://www.gold.org/about-gold/gold-supply/gold-mining/gold-mining-map">World Gold Council</a>, Tanzania is the fourth largest gold producer in Africa.</p>
<p>Recently three laws were <a href="http://africanarguments.org/2017/07/17/tanzania-magufulis-mining-reforms-are-a-masterclass-in-political-manoeuvring/">passed</a> that squeeze the mining companies for revenue. They include shareholding entitlements, higher royalty rates and further tax rises.</p>
<p>The new legislation introduced sweeping new requirements intended to support the country’s <a href="http://www.mof.go.tz/mofdocs/msemaji/Five%202016_17_2020_21.pdf">industrial goals</a>. Mining companies are now required to train Tanzanians, give preference to local suppliers and to source from joint ventures between domestic and foreign firms if domestic suppliers cannot be found. These rules mean additional costs for miners, but a boost for Tanzanian employees and firms that could become nascent industries.</p>
<p>While the new requirements were all painful for mining companies, they promised significant benefits for Tanzania and merited a try. Ultimately, engineers and economists will have to calculate whether mining companies can make those concessions without operating at a loss.</p>
<p>But the questions are technical and the answers are not well established. It’s possible that the mines could still be economically viable even after this policy overhaul.</p>
<p>Whether its tactics were good or not, the Tanzanian government had reasons for adopting a brazen approach to negotiations with the mining companies too. After it announced a series of changes in 2016, it was confronted by mining company intransigence. Their development agreements enshrined protections against all manner of intrusions and impositions. They seemed resolved to impede changes by resorting to delaying tactics, legal obstacles and arbitration.</p>
<p>But Magufuli’s decision to scrap development agreements between the government and mining companies and to prohibit international <a href="http://parliament.go.tz/polis/uploads/bills/1498722623-PERMANENT%20SOVEREIGNTY.pdf">arbitration</a> sent a clear message: companies didn’t have a lot of choice. </p>
<p>His unilateral and combative approach <a href="http://africanarguments.org/2017/07/17/tanzania-magufulis-mining-reforms-are-a-masterclass-in-political-manoeuvring/">smacks</a> of domestic politics. But it could also serve to dissuade the mining companies from a course of resistance.</p>
<p>It showed mining companies how far the Tanzanian government was willing to go and how much they wanted. It quickly provoked concessions. Acacia <a href="http://www.acaciamining.com/media/press-releases/2017/2017-07-14.aspx">agreed</a> to some of the terms two weeks ago. But if it hoped these would placate Magufuli, they were wrong. </p>
<h2>Counting to $190 billion</h2>
<p>Until the tax bill was tabled, it seemed as though Magufuli wanted a new settlement with the mining companies. Now it looks as though he wants new mining companies.</p>
<p>To put the USD$190 billion figure in context, all the proven and probable gold in Acacia’s mines is <a href="http://www.acaciamining.com/%7E/media/Files/A/Acacia/documents/aca-reserves-resources-statement-2016.pdf">worth</a> just over USD$10 billion at today’s prices. Including sites under exploration and the further inferred and estimated deposits, there is a further USD$24 billion worth of gold, and further deposits of silver and copper.</p>
<p>After these minerals are mined and processed, profits will be just a fraction of that. And even if there is as much gold as guessed, it will take decades to liberate it. In short, Acacia can never make enough to pay USD$190 billion in taxes. It would close the mines before they paid a sum that tall.</p>
<p>The sum of USD$190 billion was reached in fines, interest and backdated tax revisions in light of two presidential committees. The first reported that Acacia had grossly under reported the amount of gold in containers of copper-gold concentrate bound for export. The second <a href="https://www.cgdev.org/blog/inflated-expectations-about-mineral-export-misinvoicing-are-having-real-consequences-tanzania">estimated</a> the revenue that the government had lost over the years, and the tax demand takes that into account.</p>
<p>If the committee findings were correct, Acacia might be sitting on enough gold to pay up, but this is not likely. If the committee’s conclusions were true, Buzwagi and Bulyanhulu mines would be the second and third largest in the <a href="http://www.mining.com/the-worlds-top-10-gold-mines/">world</a>. Tanzania would have <a href="http://www.theeastafrican.co.ke/business/How-much-gold-does-Tanzania-have-/2560-3956294-11li4jt/index.html">produced</a> not 55 tonnes of gold last year, but 154 tonnes. That would <a href="http://www.gold.org/about-gold/gold-supply/gold-mining/gold-mining-map">represent</a> approximately 5% of world gold mine production. Sums of that scale affect shares, currency appreciation and even the world gold price, and that makes it <a href="https://www.cgdev.org/blog/inflated-expectations-about-mineral-export-misinvoicing-are-having-real-consequences-tanzania">unlikely</a> that past production was kept secret as the committee suggests.</p>
<h2>What next?</h2>
<p>There are any number of reasons for the Tanzanian government’s decision to submit the tax demand – even if it doesn’t think that Acacia will ever pay. It could be a further bargaining ploy, a plea for attention, a failure of coordination or a strategic miscalculation. </p>
<p>But the most likely explanation is that this is part of a mounting campaign to drive the miners out of Tanzania altogether. Last week, Magufuli <a href="http://www.businessdailyafrica.com/news/Magufuli-threatens-to-close-mines-if-owners-delay-negotiations/539546-4027128-j1i6wd/index.html">announced</a> that if the mining companies continued to delay negotiations, </p>
<blockquote>
<p>I will close all mines and give them to Tanzanians. </p>
</blockquote>
<p>With every new development, this threat seems less and less an idle boast.</p><img src="https://counter.theconversation.com/content/81632/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dan Paget does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Until Acacia was served with $190 billion tax bill, it seemed as though Tanzania’s president wanted a new settlement with the mining companies. Now it looks as though he wants new mining companies.Dan Paget, DPhil Politics (African electoral politics), University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/774792017-05-10T09:01:16Z2017-05-10T09:01:16ZSenate inquiry told zero tax or royalties paid on Australia’s biggest new gas projects<p>This week’s budget papers show the government spending A$33 billion on education this year, nearly the same amount that Australia’s five new offshore gas fields will make in sales each year when they are running at full capacity.</p>
<p>Unless prices spike higher, however, these five monster projects may never pay a cent in royalties or Petroleum Resource Rent Tax (PRRT). Unless the aggressive tax structuring of the oil majors is met with equally aggressive enforcement by government, the world’s biggest oil companies - Chevron, Exxon, BP and Shell - will pay very little in income tax too. Billions each year in profit from extracting Australia’s natural resources will be funnelled offshore. It is a giveaway of immense magnitude.</p>
<p>Under pressure from a campaign by unions and the <a href="http://www.taxjustice.org.au/">Tax Justice Network</a>, the government finally extended the <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Corporatetax45th">Senate Inquiry into Corporate Tax Avoidance</a> to encompass the PRRT. Hearings have recently, though not ideally, been held in Perth. The evidence was stunning.</p>
<p>Five new offshore gas projects are coming online: Gorgon, Wheatstone, Ichthys, Pluto and Prelude. When these are running at full production capacity they are unlikely to pay any PRRT for many years to come – the companies themselves concede it will be 2029 – and no royalties apply. The Tax Justice Network and the International Transport Workers’ Federation (ITF) say there is a good chance, on the government’s own numbers, that PRRT will never be paid on these 40-year projects. </p>
<p>Only 13% of this new gas capacity is owned by an Australian-based company, Woodside, which counts Shell as its key shareholder with 13%.</p>
<h2>How could this happen?</h2>
<p>Hearing the testimony of the oil majors before the Senate committee, the casual observer might not have detected any significant issue of national interest. That is because the oil companies were permitted to tweak the numbers in the government expert’s report and overlay their own variables.</p>
<p>Chevron, the biggest player in the space and operator of Gorgon and Wheatstone LNG projects, dusted off an old report it had commissioned from ACIL Allen Consulting. This claimed its contribution to government coffers between 2009 and 2040 would be a thumping $338 billion.</p>
<p>Although he did not reject the ACIL report as being old, managing director Nigel Hearn predicted the PRRT payments from Gorgon (now shipping) and Wheatstone (to ship later this year) would be between $60 billion and $140 billion.</p>
<p>Unless the price of oil and gas runs sharply higher, however, the more plausible figure is zero as PRRT won’t be paid for years, and perhaps not at all. Zero to $338 billion. You could steer a fleet of oil tankers through that gap. So how believable are the claims of the gas lobby?</p>
<p>In its submission, the Australian Tax Office estimated the sector had amassed $238 billion in PRRT credits, credits the companies could use for years before they started to pay significant amounts in PRRT. Further, under the PRRT as it is presently structured, exploration losses are transferable, so they can be offset against income on other projects.</p>
<p>Besides the flexible structure of PRRT concessions, the industry has $34 billion in carried-forward tax losses to offset against income tax, as noted in the submission by the Tax Office. </p>
<p>These are mostly held between the major players – Chevron, Shell, Inpex, ExxonMobil and Total – which can deploy the credits in further reducing any income tax they may owe.</p>
<p>In defence of these companies, they were not expecting the price of oil to halve and the present spectre of a global gas glut. The economics of the projects were based on higher commodity prices. As was the PRRT.</p>
<p>According to Wood Mackenzie analysis conducted for the government, the gas giants would pay $US7 billion in PRRT payments over the life of the five emerging gas projects. That’s at an oil price of $US60.</p>
<p>At a price of $US80, PRRT of $US25 billion would be paid over the 40 years. Yet the oil price is now beneath $US50.</p>
<p>Chevron’s claim to the Senate committee of PRRT payments of $60 billion to $140 billion is wildly out of sync with Wood Mackenzie’s estimate of $7 billion. This is because the companies were able to take the Wood Mackenzie analysis and tweak it as they saw fit, and they surely seized the opportunity.</p>
<p>When asked by the committee about the assumptions underlying the group’s $60 billion to $140 billion PRRT projections – things like the oil price – Chevron executives took the question on notice.</p>
<h2>Adding insult to tax injury</h2>
<p>Incidentally, Chevron has now taken the mantle from BP Australia on lobbying to drill in the Great Australian Bight and its top tax executive confirmed that the exploration company was entitled to tax credits in the event of an oil spill.</p>
<p>Under the PRRT, said tax executive Michael Fenner, if there was a spill from a well, the company was entitled to deduct the full amount for recovery plus the 18% uplift which compounded annually. </p>
<p>In this event, taxpayers would effectively be paying for the oil spill as the uplift provisions are so generous that exploration tax credits almost double in four years.</p>
<p>The other issue with the PRRT regime is that exploration credits are 100% transferable. The ATO has identified this as a problem because the oil companies had already banked $238 billion in PRRT tax credits.</p>
<p>Tranferability is presumably why ExxonMobil Australia pays half of what BHP pays in PRRT on gas production in the Bass Strait.</p>
<p>Jason Ward, global strategist with the International Transport Workers’ Federation (which has been running a campaign to expose Chevron’s tax dodging) and who testified before the Senate, said his estimates of zero PRRT were based on industry numbers. He told the committee:</p>
<blockquote>
<p>APPEA’s (oil and gas peak body the Australian Petroleum Production & Exploration Association) modelling, also done by Wood Mackenzie, shows that at an oil price of $US80 a barrel Gorgon would pay something. At $US60, there is no PRRT. Why are we giving away our resources for free to the world’s largest multinationals while the government raises taxes on working people?</p>
</blockquote>
<p>At least with the LNG producers at Gladstone, the Queensland government gets a 10% royalty. Even then, says Ward, Japan collects more tax on imported Australian LNG than Australia collects in PRRT on all LNG production, and the prices of Australian gas are often cheaper in Japan.</p>
<p>There are no royalties on the new offshore gas projects. At the heart of the problem is that tax or royalties based on profit rather than volume are easily gamed. Profit can be manipulated, whereas sales and production cannot. </p>
<p>The Senate inquiry is absolutely vital to Australia’s revenue base. Unless the PRRT is reformed, billions in royalties and taxes may never be forthcoming.</p>
<hr>
<p><em>This column, co-published by The Conversation with <a href="http://www.michaelwest.com.au/">michaelwest.com.au</a>, is part of the <a href="https://theconversation.com/au/topics/democracy-futures">Democracy Futures</a> series, a <a href="http://sydneydemocracynetwork.org/democracy-futures/">joint global initiative</a> with the <a href="http://sydneydemocracynetwork.org/">Sydney Democracy Network</a>. The project aims to stimulate fresh thinking about the many challenges facing democracies in the 21st century.</em></p><img src="https://counter.theconversation.com/content/77479/count.gif" alt="The Conversation" width="1" height="1" />
<h4 class="border">Disclosure</h4><p class="fine-print"><em><span>Michael West has received funding from GetUp and the Tax Justice Network to analyse the tax affairs of 20 top multinational companies operating in Australia.</span></em></p>The Senate Inquiry into Corporate Tax Avoidance has heard stunning evidence about the failure of the tax and royalties system to capture any of the billions being generated by new projects.Michael West, Adjunct Associate Professor, School of Social and Political Sciences, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/688132016-11-21T04:06:27Z2016-11-21T04:06:27ZAustralia must catch up with Papua New Guinea on how we tax gas<p><a href="http://www.treasury.gov.pg/html/national_budget/2017.html">Papua New Guinea’s 2017 budget</a> takes big steps in resource tax reform. Following suggestions <a href="https://pngnri.org/portfolio/proceedings-of-the-2014-png-tax-review-and-research-symposium/">that I made together with former Labor minister Craig Emerson</a>, starting next year resources companies operating in Papua New Guinea will pay a revamped resource rent tax, as well as the existing royalties and company taxes.</p>
<p>With Australia’s <a href="https://www.theguardian.com/business/2016/nov/21/australia-budget-deficit-beyond-2021-scott-morrison">budget deficit worsening</a>, following Papua New Guinea’s lead may help us bring in more revenue from natural gas, sooner. </p>
<h2>The different ways of taxing resources</h2>
<p>Companies in Australia operating large gas-to-liquefied natural gas (LNG) projects pay a resource rent tax (a tax levied on above-normal profits), as well as the regular company tax. Above-normal profits from these new projects are perhaps a decade away, which is why there has been a recent drop in <a href="https://theconversation.com/australia-is-missing-out-on-tax-revenue-from-gas-projects-62899">resource tax revenue</a>. </p>
<p>This resource rent tax has replaced royalties for most of these LNG projects. While the resource rent tax is paid on profits, royalties are paid directly on the value of a resource as it is extracted, long before profit or loss is a factor. </p>
<p>A re-introduction of some level of royalties would not increase the tax burden for industry, but would more immediately provide much-needed revenue for government. </p>
<h2>Our tax system wasn’t designed for current gas production</h2>
<p>Australia’s <a href="http://www.austlii.edu.au/au/legis/cth/consol_act/prrtaa1987452/">petroleum resource rent tax</a> (PRRT) applies to oil and gas projects but it was not originally fine-tuned for gas.</p>
<p>My <a href="https://taxpolicy.crawford.anu.edu.au/publication/ttpi-working-papers/8697/petroleum-resource-rent-tax-overview-primary-documents-and">recently published PRRT working paper</a> provides an overview of newly available archival documents that give insight into the political and consultative processes of the Hawke-Keating government (1983-1991), which passed the PRRT. </p>
<p>Back in 1984, gas production was for domestic consumption and the technology for LNG exports was underdeveloped. The archival papers show that gas design considerations were excluded because projected PRRT revenues could not match gas royalties. So instead the Hawke-Keating government focused on generating PRRT revenues from oil. </p>
<h2>The gas industry is important</h2>
<p>There are now more gas than oil reserves in Australia. The image below shows the large integrated gas-to-LNG projects in Australia: offshore natural gas in the west, and onshore coal seam gas in the east. The focus of resource tax reform should be on gas projects in Commonwealth waters off Western Australia. They include Woodside’s Pluto, Chevron’s Wheatstone and Gorgon, and Inpex’s Ichthys. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/145954/original/image-20161115-14006-1a19f8p.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/145954/original/image-20161115-14006-1a19f8p.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/145954/original/image-20161115-14006-1a19f8p.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=438&fit=crop&dpr=1 600w, https://images.theconversation.com/files/145954/original/image-20161115-14006-1a19f8p.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=438&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/145954/original/image-20161115-14006-1a19f8p.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=438&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/145954/original/image-20161115-14006-1a19f8p.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=551&fit=crop&dpr=1 754w, https://images.theconversation.com/files/145954/original/image-20161115-14006-1a19f8p.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=551&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/145954/original/image-20161115-14006-1a19f8p.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=551&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Large LNG Projects, Australia.</span>
<span class="attribution"><span class="source">Santos Ltd, with permission</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>The table below shows the current taxation of selected LNG projects. Company tax and the PRRT apply to all these projects. But only coal seam gas and the North West Shelf projects need pay royalties. </p>
<p>Industry has not complained about the payment of these royalties. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/145956/original/image-20161115-30744-3xdtkd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/145956/original/image-20161115-30744-3xdtkd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/145956/original/image-20161115-30744-3xdtkd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=449&fit=crop&dpr=1 600w, https://images.theconversation.com/files/145956/original/image-20161115-30744-3xdtkd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=449&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/145956/original/image-20161115-30744-3xdtkd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=449&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/145956/original/image-20161115-30744-3xdtkd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=565&fit=crop&dpr=1 754w, https://images.theconversation.com/files/145956/original/image-20161115-30744-3xdtkd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=565&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/145956/original/image-20161115-30744-3xdtkd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=565&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Author provided</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<h2>The way we tax our gas needs reform</h2>
<p>All countries with petroleum resources levy additional resource taxes, which result in industry paying high taxes. For example, look at Norway and the United Kingdom. In both those countries, the accepted justification for additional resource taxes on petroleum is due to the finiteness of mineral resources: extraction can only occur once.</p>
<p>As the Turnbull government scrambles to fix the budget deficit, the media has focused on the low revenue forecasts from <a href="http://www.abc.net.au/news/2016-10-10/oil-and-gas-tax-may-raise-no-extra-revenue-for-decades/7917682">the PRRT on gas for LNG export</a>. No wonder, given Australia’s export gas <a href="http://industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/remp/REMP-April-2015.pdf">industry has invested $200 billion</a> in new infrastructure. </p>
<p>Pressure is building for a parliamentary inquiry into the PRRT. At a recent Senate Economics Legislation Committee hearing, Finance Minister Mathias Cormann and Tax Commissioner Chris Jordan found it difficult to answer questions <a href="https://youtu.be/1TBMoWWXoGU">posed to them on the PRRT</a>. </p>
<h2>How should the natural gas for LNG be taxed?</h2>
<p>The PRRT has its place in the tax mix. However, given the different infrastructure needs and lower pricing characteristics of natural gas, the PRRT for gas needs to be modified. This has been highlighted before, most notably the 2009 Henry Review of Australia’s tax system, <a href="https://taxreview.treasury.gov.au/Content/Content.aspx?doc=html/home.htm">criticised the design of the PRRT for gas</a>. </p>
<p>The Turnbull government should assess whether the sole PRRT in relation to LNG projects in Commonwealth waters is sufficient to meet the objective of sharing the benefits from resource projects. Australia’s 2016 federal budget figures show a projected decrease in PRRT revenues to $800 million per annum in 2020, which suggests that the community could <a href="http://www.budget.gov.au/2016-17/content/bp1/html/bp1_bs4-02.htm">wait decades for benefits from PRRT on gas</a>. </p>
<p>A more equitable arrangement would require more prompt payment to the government for gas extraction, such as production-based royalties paid on the coal seam gas and North West Shelf projects, as well as a modified PRRT design. </p>
<p>Paul Keating famously described the 1990s recession as <a href="http://www.theage.com.au/news/business/the-real-reasons-why-it-was-the-1990s-recession-we-had-to-have/2006/12/01/1164777791623.html">“the recession we had to have”</a>. Likewise, taxation reform of the PRRT applicable to natural gas processed for LNG export is an absolute necessity. It’s a reform we “have to have”.</p><img src="https://counter.theconversation.com/content/68813/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Diane Kraal does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The way Australia taxes companies for gas projects now lags behind our closest neighbour, Papua New Guinea, which has reformed its tax system to ensure it gets money sooner.Diane Kraal, Senior Lecturer, Business Law and Taxation Dept, Monash Business School, Monash University, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.