37 Local Mayors Push for Energy Companies to Pay Climate Change Levies

Wind turbines in Albany, Western Australia, on Feb. 18, 2024. Susan Mortimer/The Epoch Times

A group of Australian mayors and councillors are calling on the federal government to collect an extra $10 billion each year from petroleum companies to pushback against climate change.

The 37 leaders who signed the letter include independent mayors and councillors, and a large number of Greens local government leaders.

The mayors want to see reforms to the Petroleum Resources Rent Tax (PPRT) to raise an extra $10 billion each year to help local governments fund climate mitigation schemes.

This comes amid a Senate Inquiry into the Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023.

Under the proposed legislation, the government could limit the taxable income that can be offset by deductions to 90 percent.

Woodside, a major ASX-listed oil and gas producer, warned against further changes to the tax, in a submission to the inquiry in February.

What is the Petroleum Resource Rent Tax (PRRT)

Petroleum resource rent tax is paid on profits from the sale of marketable petroleum commodities.

These include crude oil, gas, condensate, liquefied petroleum gas, ethane and shale oil.

Woodside says it is is the largest payer of PRRT and has paid more than $18 billion since 2011, the company said in its submission.

What is the Letter Calling For?

The letter from local government leaders said they bore had to deal with the impact of climate change.

“Local governments bear enormous costs from the impact of fossil fuels on our climate, including sea level rise and the aftermath of increasingly frequent and extreme fires, floods, storms and heatwaves, ” the letter said.

“However, local governments are the least resourced level of government to cope with the increasing costs of addressing climate impacts, such as maintaining infrastructure and services after climate disasters.”

Signatories of the letter published in multiple newspapers include City of Sydney Lord Mayor Clover Moore, Greens Randwick City Council Mayor Philipa Veitch, Yarra City Council Greens Mayor Edward Crossland, and Merri-bek City Council Greens Mayor Adam Pulford.

Sydney Lord Mayor Clover Moore claimed “we are in a climate emergency” driven by “the burning of fossil fuels.”

“Our tax system must take that into account and calculate the true impact of burning fossil fuels on our environment, our communities, and our economy,” Ms. Moore said.

She claimed residents in the City of Sydney were “susceptible to climate change” through “extreme weather events like heatwaves, severe storms and flooding, and the impacts of bushfires, including poor air quality and disruption to transport.”

“We have had to create infrastructure that is resilient to climate change: planting 16,000 trees to create shade; building a $140 million drain to mitigate flooding in Green Square; and investing in mobile cooling hubs for our most vulnerable.”

What is Being Proposed?

The PRRT is a levy on energy companies extracting oil and gas resources in Australia.

The proposed Treasury Laws Amendment (Tax Accountability and Fairness) Bill would limit the amount of PRRT that could be deducted on company tax bills.

Australia Institute Chief Economist Greg Jericho said even modest changes to the government’s 90 percent cap would generate “over $18 billion” over the forward estimates.

He said this revenue could be put towards essential public services, affordable housing, and renewable energy.

“The PRRT collects less revenue than the government does through HECS repayments, and less than the tobacco or beer excises. Our analysis shows there are simple ways to address that,” he said.

The Albanese government released a new Future Gas strategy on May 9, committing to using gas as a power source beyond 2050.

Mr. Jericho said the government’s strategy does not mention the PRRT.

“Now is the time to ensure our tax system delivers a fair share of oil and gas profits for all Australians,” he suggested.

“Budgets are a question of choices, and there are straightforward pathways for the government to reform the PRRT to ensure oil and gas companies pay a fairer return on their profits and deliver for all Australians.”

Woodside Warns Against Raising Tax

However, major oil and gas producer Woodside said the PPRT continues to operate “as intended.”

The company warned against any further amendments to the PPRT in its submission.

“We are aligned to the findings of the Callaghan Review, the PRRT achieves a fair return to the community for the extraction of petroleum resources without discouraging investment,” Woodside said in its submission.

Woodside noted that governments receive a return, even when project investors do not.

“The growth in our tax payments has shown when Woodside performs well, the state and federal governments enjoy significant benefits too,” the company said.

The ASX-listed company noted under the PRRT amendments, Woodside expects to pay more tax over the forward estimates.

It says any further changes would risk “unintended consequences,” these include impacting large scale investments, and could lead to “asset write-downs or fiscal uncertainty in other sectors, including renewable energy.”