While Crikey has long enjoyed dissecting “independent reports” that are actually piles of tendentious rubbish, it’s rare to encounter reports that turn out to be 100% out in their figuring. But a new one from the Australia Institute has revealed three fossil fuel industry reports that have proved to be spectacularly wrong — at taxpayers’ expense.
The Australia Institute’s methodology was simple: look at what claims fossil fuel companies and their lobby groups made about how much tax they’d pay on their exploitation of fossil fuels, and then check their tax records to see how they stacked up.
The result? 100% wrong. Well, OK, we can quibble over whether it’s exactly 100%, but close enough.
Report 1 The fossil fuel lobby peak body, Australian Petroleum Production & Exploration Association, commissioned a report from ACIL Tasman in 2012 concluding that the Commonwealth would receive total tax revenues of between $58.5 billion (base case scenario) and $85.6 billion under an expansion scenario over the lives of the three gas export operations in Queensland: Australia Pacific LNG, Gladstone LNG and Shell’s Queensland Gas Company. The report even had a cut graph of the rapidly accumulating tax revenue from the projects.
Report 2 In 2015, Chevron commissioned ACIL Allen to prepare a report showing it would pay the Commonwealth more than $110 billion in tax revenue over the life of the Gorgon and Wheatstone projects off Western Australia. Again, it came complete with cute graphs of mounting tax revenue.
So how much have the three projects paid in tax to the Commonwealth since then? Zero — with the exception of Santos, owner of Gladstone LNG, which paid $3 million tax in 2018, although it’s unclear if that relates to Gladstone LNG. Assuming it is, it means ACIL Tasman was only out by a Bradmanesque 99.995%.
How much has Chevron paid in tax — income tax, or in petroleum resource rent tax? You guessed it. Zero. Not a cent. ACIL Allen was out by 100%.
Report 3 Well this wasn’t so much an external report as an internal estimate by Shell about its Prelude project floating off Broome. This is from an industry publication just under a decade ago:
Shell say their Prelude floating LNG project will contribute $45 billion to the Australian economy over the life of the project, $12 billion of which would be tax payments. Speaking at the Australian Gas Technology Conference in Perth yesterday, Shell Australia’s general manager for production Michael Schoch said the project would deliver key benefits. ‘We estimate that Prelude will bring benefits to Australia of some $45 billion over the life of the project, of which taxes would be around $12 billion,’ he said.
You probably won’t be shocked — or even Schoch-ed — to learn Shell has paid exactly zero tax and PRRT. But maybe it’s going to pay a lot of tax from Prelude in future? Well, it won’t be paying much at the moment because it’s out of commission due to a fire in December. But long before the fire, Shell happily told us it intended to never pay any tax on revenue either from Prelude or its share in Chevron’s Gorgon project.
It could be pure coincidence, but funny how those massive errors all turned out to be in favour of the people who commissioned the reports or made the estimates.
Next time a fossil fuel company preaches economic benefits, bear in mind the margin of error: 100%.
