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6 April 2006
MELBOURNE: In a speech today to the American
Chamber of Commerce, ExxonMobil Australia Chairman, Mark Nolan highlighted how
current state and federal tax regimes had created distortions between
competing energy sources – particularly gas and coal.
“Unfortunately the evolution of our state/federal tax system over time has
produced a situation where competing energy sources face widely divergent tax
burdens,” Mr Nolan said
“Nowhere is this better
illustrated than in Victoria where natural gas produced offshore is taxed by
the Commonwealth at over 15 times the rate of the state tax applied to coal
(gas $1/GJ vs coal $0.059/GJ).
The net effect of the
interaction of these two fiscal regimes has been to effectively price natural
gas out of base load power generation in Victoria.
“While
coal would continue to represent an efficient energy source for Australia,
gas-fired electricity offers an equally efficient supply source together with
one of the biggest near-term reduction opportunities in greenhouse gas
emissions.
“This can be achieved with current technology,
without introducing high cost measures such as emissions permit trading or
carbon taxes. Simply levelling the taxation "playing field" would mean that
offshore gas could compete much more effectively into domestic power
generation on price.
“One possible way to do this would be to
offer a rebate to gas fired power generators to harmonise the fiscal regimes,”
Mr Nolan said.
"By offering the tax rebate to the generator,
additional tax revenue would still be raised from the petroleum liquids
produced with the gas. This may in the long run make such a change revenue
neutral from a Federal budget perspective.
"This is not a
request for special treatment but a request for equal treatment - removing a
source of competitive disincentive in the domestic power generation sector so
different energy sources can compete on the same basis."
Media contact:
Rob Young: 0438 080 998 / (03) 9270 3443
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