Pauline Hanson, the leader of One Nation, is set to shake up Australia's offshore gas tax system with a proposal that draws heavily from Norway's model. This move comes as a response to the growing public support for increasing taxes on gas companies and the debate over balancing investment attraction with public value extraction from Australia's LNG exports. Hanson's plan, which she will unveil at the Australian Energy Producers conference, aims to replace the petroleum resource rent tax with a production royalty and taxpayer equity in LNG projects. This interventionist proposal seeks to boost production and return profits to the public purse.
One Nation's proposal would scrap the petroleum resource rent tax and impose a 10% wellhead royalty on all offshore gas and oil production. Additionally, it would establish a Commonwealth co-investment scheme where the government would take ownership stakes in new developments in exchange for funding early exploration. This model, inspired by Norway's sovereign wealth fund, is designed to convert Australia's resource base into a long-term financial asset. However, the proposal has faced criticism from some industry figures who view it as political overreach and unachievable.
Hanson's foray into the policy debate has been welcomed by some in the gas industry, who appreciate her understanding of prospectivity, a term referring to the probability of valuable resources in a geographic area. The proposal also reflects the influence of prominent supporters like Gina Rinehart, who owns a controlling stake in Queensland gas producer Senex. However, there are concerns about the government's increased control over investment decisions and the potential deterrence of private capital.
The plan comes on the heels of One Nation's historic victory in the Farrer byelection in NSW, where David Farley became the first One Nation candidate to win a House of Representatives seat. This victory has strengthened the party's position in the polls and increased its negotiating influence in the Senate. As Hanson continues to engage with corporate Australia, her proposal raises important questions about the balance between attracting investment and extracting public value from Australia's resource-rich status.
