Despite the $200 billion invested in LNG over the past decade – putting Australia on track to surpass Qatar as the world's biggest exporter of LNG by 2019 – there is little or no sign of any benefit to the nation via the PRRT. In fact, PRRT revenues are the only class of Commonwealth tax revenue that has fallen over the past decade. In 2005, the federal government collected $1.9 billion in PRRT, mainly from oil operations in Bass Strait. Last year, despite the explosion in LNG projects, revenue fell to $1.4 billion and the 2016 budget slashed the projected take by almost half to just $800 million a year out to 2020.

Diane Kraal, an expert in resource taxation from Victoria's Monash University, believes the PRRT system is a dud because it was designed in the Hawke government era to tap super profits from oil. PRRT is a profits-based tax that taxes "rents" – or excessive returns – above a specified rate after deductible expenditure, including exploration and capital investments. While oil prices spike intermittently, Dr Kraal said, LNG supply is based on long-term contracts to countries such as Japan and profits will remain steady rather than super. "I doubt in my lifetime that those companies will be paying PRRT on gas," she said. "In effect, we are giving it away. It's already an uphill battle to get those companies to pay corporate tax.

"I compare it to lobster and abalone. There doesn't seem to be any around these days because they are all extracted and sold overseas and Australians don't get to enjoy them or get any benefit from that extraction." Dr Kraal, who has written a paper calling for a review of PRRT, has warned a senior Treasury official that the system is a white elephant to the detriment of royalties, which are supposed to reflect that a nation's finite resources can only be extracted once and should therefore enrich the country as well as profit-focused companies willing to invest in Australia. At a Senate estimates hearing in May, Roger Brake, the acting deputy-secretary of Treasury's revenue group was asked to explain the dive in projected PRRT. He put it down to the lower Australian dollar, oil prices and the volatility of rent-based taxes. He also warned that the companies who invested in LNG are allowed to write off their investments against tax before being forced to pay royalties. Chevron, for example, has potential tax credits of more than $US67 billion ($A90.6 billion) after the cost of building the facility blew out by a third.

"These projects can take a long time before they start paying PRRT, so you can get these long lags between when they enter production and when they start paying PRRT," Mr Brake said. But sources have told Fairfax Media that the Australian Tax Office is concerned that the PRRT will not deliver anything over time. The system of tax credits was made more attractive for oil and gas companies at the same time as the Gillard government was fighting a full-frontal assault by miners over Labor's proposed mining tax. To head off another fight, oil and gas companies agreed to back the PRRT – which operates the same way as the mining tax – in return for lucrative concessions negotiated by then resources minister Martin Ferguson. In her paper, Dr Kraal criticised the lack of transparency around how PRRT is assessed, saying that the ATO relied on the assessment of the big accountancy firms employed by multinational companies to calculate their liabilities

"The first step is to review the current PRRT regulations on the 'gas transfer price methodology' with the aim of determining whether it adequately covers the latest developments in natural gas extraction technology," she wrote. Treasury and the ATO both declined to comment citing caretaker conventions. In its marketing material, Chevron has promised "direct taxation and royalty payments" of $1 billion a year by 2019, rising to $3 billion by 2024 and out to 2036. The company was convicted of tax avoidance in 2015 when the Federal Court slapped it with a $300 million bill for profit-shifting. Polling has found Australians are angry about multinational companies ducking taxes and both major parties say they have a plan to address the sore point.

Last week, Mr Shorten boasted: "We will make multinationals pay their fair share" and Treasurer Scott Morrison declared: "We are cracking down in areas on revenue, particularly in the area of multinationals … Labor are going soft on multinationals."

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