GST carve-up penalises CSG developments: Frydenberg

Energy minister Josh Frydenberg. (AAP Image/Mick Tsikas)

Energy minister Josh Frydenberg. (AAP Image/Mick Tsikas)


The Turnbull government has accused states restricting the development of coal seam gas reserves of being ‘wilfully blind’ to their own economic interests, as it holds the threat of cutting GST payments over them.

The discussion around changing the way gas resources are treated in the GST carve-up comes as the chemical industry warns jobs are being lost because of high gas prices.

Energy Minister Josh Frydenberg says it’s a ‘curious consequence’ of existing GST arrangements that states which do develop their resources are penalised while those which don’t are rewarded.

‘It’s even very unfortunate that this discussion has to be had at the moment because the states are so wilfully blind to their own economic interests,’ he told Sky News on Monday.

If Victoria were to develop its gas resources, manufacturers and households in that state would benefit greatly, he said.

‘You’d see more jobs, more investment and most importantly of all, lower energy prices.’

Finance Minister Mathias Cormann has described GST distribution as a lever to encourage states to develop their economies to their full potential.

The Commonwealth Grants Commission – the independent body that carves up the GST pie – has indicated it will consider coal seam gas development as part of its 2020 review of the formula to split the tax take between jurisdictions.

Queensland and South Australia have no bans on gas exploration or development, but all other jurisdictions (bar the ACT which doesn’t have any gas reserves) have some form of restrictions.

The commission has indicated it could take the view that all states have the opportunity to exploit gas resources and whether they do or not reflects policy choices – potentially leaving states with a budget hole if they’re not raising revenue from gas developments.

The Productivity Commission is also examining the way GST is distributed, including the impact of resource development.

Meanwhile, Chemistry Australia, which represents chemical manufacturers, says gas prices have tripled for its members over the past five years.

‘Australians need to know that this crisis is hitting twice: once on their gas and electricity bills, and again in job losses,’ chief executive Samantha Read said.

7 responses to “GST carve-up penalises CSG developments: Frydenberg”

  1. Greg says:

    Oh puhleeeese!
    It has long been established that if Australia increased its natural gas production massively, it would be exported anyway. We already have gas being produced far in excess of our domestic consumption needs, but it is being “over exported”. So greater gas productions equals greater gas exports – nothing more and nothing less.
    The level of gas production has absolutely no impact on domestic gas availability – that rests in the hands of the mob determining how much gas is exported.

    So our very own Joseph Goebbels (Josh Frydenberg) continues to mouth the nonsense being spruiked by the “chemical manufacturers” (i.e. the mob exporting excessive quantities of our gas), GST considerations aside, that somehow the States are responsible for skyrocketing gas prices and subsequent job losses.

    Puhleeeese Mr Goebbels, do the courtesy of crediting us with at least a modicum of intelligence.

  2. Adrian Ingleby says:

    Unconventional CSG extraction risks permanently and irretrievably contaminating and depressurising our groundwater resources. Methane gas is a greenhouse gas and fugitive emissions move into the atmosphere, they are more heat trapping than C02, which would not worry any politician who is a ‘climate change denier’, but the rest of us care. It is a risk to human and animal health.

    The Independent Expert Scientific committee reporting on the Santos Narrabri Gas project identified, “knowledge gaps, uncertainties and data limitations” within the EIS and had “low confidence in the water balance modelling” provided by Santos. Other issues include the possibility the drawdown of water may exceed a two-metre threshold in some areas, potentially affecting farmers and groundwater-dependent ecosystems (GDE). The panel noted Santos has yet to resolve how it will store and manage salts from produced water, which would amount to 115 tonnes per day in early years. Complicating storage and disposal is the likelihood of metals and radionuclides in the waste. Professor Khan a water expert at the UNSW said the project would generate about 430,500 tones of salt over its 25 year life. He said, “Importantly, the lifespan of this salt storage will need to be properly considered. Salt does not biodegrade in the environment and has an infinite environmental residence time.” [SMH 20170903]

    Victoria Premier Daniel Andrews said, “Victorians have made it clear that they don’t support fracking and that the health and environmental risks involved outweigh any potential benefits. Our farmers produce some of the world’s cleanest and freshest food. We won’t put that at risk with fracking.”

    The states that have banned fracking are “wide awake” to the dangers of unconventional gas extraction and are protecting its people. Victoria is protecting its farming exports worth $11.6 billion. This current federal government is “wilfully blind” to climate change, global warming and renewable energy; they and the fossil fuel lobbyists who support them are in the dark stuck under a mountain of coal slag.

    The Commonwealth Grants Commission will consider the issue in its 2020 review. No worries, there will be a NSW State election and a Federal election before then. That’s when the “little people” who are “wide awake,” will have their say.

  3. Gregory Pimm says:

    The Gas Exporters do not actually contribute to net GST collections, because the GST they pay is refunded.

    So the States do not currently receive any GST funding from the exporting Gas Industry.

    The Federal Government is at fault by exempting foreign owned exporters from GST. If the exemption was removed, the States would benefit from a huge increase in the GST pool.

    States are at fault for not requiring that royalty payments include a required tithe (10%) of processed product given to the people of Australia.

  4. max igan says:

    when is this country going get enough backbone to dismiss Turdfull and his criminal corporate run puppet show masquerading as govt and get this kakistocracy out of power and replace them with human being

  5. bruce prior says:

    Strange that I hear NOT ONE THING about health and welfare of the people caught up in a gas field. Only hear about “more gas” and “jobs” (which will be restricted to FIFO workers only). Bearing in mind that the gas is the commons and therefore property of the “Australian People” and that the people cannot access this resource unless at an “international parity price”; I believe the moratoria are the only way we can control the rapacious fossil fuel vandals.

    With good reason there will be more & more of the “Bentley Blockade” activity which will be the response of decent people (classed as criminals by the neolibs). The Federal (and some state) politicians seem to believe they can sell our property of at bargain basement price to the fossil thugs. Bear in mind the massive difference between the yearly revenue of the Qatari people vs Australian people.

    Keep on keeping on Simon & LTG. The fight is just beginning

  6. Gregory Pimm says:

    As the Federal Government refunds the GST paid by the exporting gas companies instead of sharing with the States, it seems the height of hypocrisy to threaten reducing GST allocations to the States.

    This exemption also makes it more profitable for gas producers to sell overseas rather than in Australia.

    The States control royalties. The resources of the state are the sovereign property of the people of the state. Therefore the state should make a percentage of refined gas part of royalties.

  7. Eve Jeffery says:

    This guy knows what the Great Gas Con is all about…

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