THE findings of a two-year Senate investigation into Australia’s long-term energy needs will be deferred to allow a committee to quiz Treasury secretary Ken Henry over the planned resource super profits tax.
THE findings of a two-year Senate investigation into Australia’s long-term energy needs will be deferred to allow a committee to quiz Treasury secretary Ken Henry over the planned resource super profits tax.
The Senate Select Committee on Fuel and Energy was due to hand down its final report to parliament at the end of the month, following a two-year investigation into domestic energy prices, energy taxation and regulation, and Australia’s long-term energy needs.
But committee chairman, WA Liberal senator Mathias Cormann, said the committee would be asking the Senate for more time to complete the report and question Dr Henry on the likely impacts of the planned 40 per cent tax on mining profits.
“We will be seeking an extension in the Senate (this) week so that we can have a special hearing with Treasury to ask them about a number of things that have come up since the Henry (tax) review was released,” Senator Cormann told WA Business News.
He said Treasury officials who had previously appeared before the committee had been unable to answer key questions because the Henry tax review had not yet been tabled.
Senator Cormann said the committee had since asked Dr Henry to appear before it early next month.
“Since that (tax review) has come out, we have sought further submissions from key stakeholders, and what we want to do is ask Treasury questions about it,” Senator Cormann said.
“So we have written to Ken Henry for him to appear before our committee sometime in July.”
The committee’s final report should then be able to be completed by the end of next month, he said.
Since the RSPT was announced, 18 industry groups, relevant regulatory bodies and other stakeholder groups have lodged submissions with the committee about the impact of the tax.
Only the submission from the Australian Workers Union was fully supportive of the tax in its current form.
Submissions from industry regulators such as the Australian Energy Market Commission and Australian Energy Regulator indicated the tax would have little impact on their activities, though the Energy Market Operator noted it could force electricity generators to increase prices.
That point was picked up by Griffin Energy, part of Rick Stowe’s failed coal mining and energy business, which argued the tax would force the government to either raise electricity tariffs further or subsidise coal-fired electricity suppliers.
Coal-fired power suppliers, including Griffin’s Bluewaters power stations at Collie, currently account for 40 per of all electricity generation on Western Australia’s main grid.
Griffin said the tax threatened the profitability of WA coal miners, but due to the absence of alternative fuel sources for base-load power generation “it will be unlikely that the state can allow these operations to fail”.
“The only way to do this ... is for the state to step in and subsidise the mining operations. This means (supply) contracts would need to be renegotiated, which would either warrant an increase in electricity tariffs or a direct taxpayer subsidy,” a Griffin spokesman said.
The Energy Suppliers Association of Australia also noted the potential impact on domestic energy prices if the tax led to reduced exploration and project investment, especially due to increased sovereign risk concerns.
Woodside Petroleum, a vocal opponent of the tax, noted that the North West Shelf project was already subject to Australia’s most onerous tax regime, having paid more than $14 billion in royalties since inception. It said it would be concerned “if any change in its taxation regime resulted in a loss of value”.
The shelf is not covered by the Petroleum Resource Rent Tax regime and could be subject to the RSPT.
