‘Huge questions’ over tax rebates for gas exploration
Taxpayer-funded research and development incentives totaling more than $44 million for a single gas company have critics calling for the exclusion of fossil fuel industries such as gambling and tobacco.
The R&D tax credit scheme, designed to encourage business innovation, currently explicitly bans “mineral or oil exploration, exploration or drilling.”
Yet at least one gas producer, Beetaloo Energy Australia, is attracting millions in tax incentives as it explores fracking for gas in the Beetaloo Basin in the Northern Territory.
The company, formerly known as Empire Energy, announced a $15.4 million cash payment in April, marking the fourth time it has accessed its R&D plan.
Lock the Door and Tax Justice Network Australia have been tracking money flowing to the gas producer through its R&D program for the past six years and say refunds now total $44.1 million.
Beetaloo Energy advocates using R&D incentives as an innovative activity rather than research and research as usual.
“The Beetaloo Basin is the world’s oldest shale gas basin and due to its complex geology, commercial extraction is not yet proven,” a spokesman told AAP.
“The activity in question is not exploration to discover the gas, but rather conduct R&D activities to produce new information to determine how this gas can be extracted.”
In a statement to the ASX, chief executive Alex Underwood said the $15.4 million would “materially strengthen” the company’s balance sheet as it progresses the Carpentaria pilot project.
Greens Senator Penny Allman-Payne pressed Department of Industry, Science and Resources officials on the validity and legality of Beetaloo Energy’s R&D tax incentive activities during senate estimates hearings.
In responses to questions in the notice, it was stated that the department’s interpretation of the legislation allows the inclusion of R&D activities where exploration, exploration or drilling may be required for purposes other than finding deposits and determining their prospective character.
“Other such purposes may include, for example, drilling to develop extraction technologies and techniques.”
Tax Justice Network Australia secretary Mark Zirnsak said transparency due to taxpayer privacy, as well as separating novel experiments from ordinary business activities, had long been a challenge for the incentive programme.
“There are companies claiming R&D incentives, but the lack of transparency prevents us from knowing whether they are legally entitled to this incentive,” he told AAP.
“And on the surface of what they are disclosing, there are big questions about whether they have the right to do so.”
Mr Zirnsak says that even if gas companies are indeed doing R&D, fossil fuels should be excluded, as gambling and tobacco companies already do, because the sector is structurally declining due to global climate commitments.
“Why would you want to continue to support R&D there when you could spend those valuable dollars on sectors that will last longer and prepare Australia to work in innovative or emerging markets?”
Lock the Gate Alliance acting national co-ordinator Georgina Woods says gas companies operating in the NT could receive more federal support following the resources minister’s latest comments
While visiting Darwin, Madeline King flagged opportunities for federal support for shared user infrastructure for the sector, including roads.
“It is incredible that the federal government is signaling more aid to Beetaloo Energy when there is so much public opposition to fracking due to its impacts on water and contribution to greenhouse gas pollution,” Ms. Woods said.
