Western Australia has long harboured hopes of independence from the rest of Australia.
But, having failed many years to get traction with the idea, the mining-state has instead launched a reverse takeover to enrich itself while sucking the east coast dry.
It began with the Woodside takeover of BHP’s assets in Bass Strait, which added the West Coast giant to the East Coast gas cartel and brought with it a much more aggressive brand of lobbying.
Next came Gina Rinehart buying into QLD’s Senex Energy in 2022, which was followed by her leading a production strike after the Gas Code of Conduct included an outrageous provision that she must supply gas to Australians at “reasonable” prices.
Then Andrew Forrest began construction on the Port Kembla LNG import plant, the worst idea in the long history of Australian bad ideas, which will double gas prices as local prices rise to import parity.
The iron ore magnates are buying gas assets as a hedge against declining iron ore. Gas prices linked to foreign markets will rise as the Australian dollar falls with iron ore.
Why Woodside wanted the declining assets of Bass Strait is beyond me, but it likely has something to do with gouging the living daylights out of the East Coast while they last.
Crikey has also investigated the malign impact of these interests on the eastern tax take.
How much damage will the inability of the major parties to do anything other than pander to the petro-state of Western Australia do to the federal budget? Two recent updates have confirmed the cost is growing rapidly.
We recently noted that economist Saul Eslake, lone crusader against the special deal that hands WA billions more GST revenue than it’s entitled to and compensates the other states from the federal budget, had calculated that the cost of the deal — negotiated by Malcolm Turnbull and Scott Morrison and extended by Anthony Albanese and Jim Chalmers — was heading towards $40 billion over 11 years.
But Eslake’s end-of-year update off the back of new WA government fiscal data now estimates the cost would escalate to $54 billion by 2030. That’s $54 billion unavailable to the federal government, which faces years of deficits, while the WA budget is deep in the black.
Meanwhile another update has confirmed the ongoing cost of federal Labor’s willingness to allow the WA fossil fuel industry — and its parliamentary wing in the form of the Cook government — to dictate how fossil fuels should be taxed.
It’s clear what a spectacular failure Labor’s “reforms” to the petroleum resource rent tax (PRRT) — which the fossil fuel industry’s political agents negotiated in 2023 to prevent any WA political fallout — have been.
Tipped in the budget papers to produce an extra $2.4 billion over five years at the time, PRRT collections instead have gone backwards. Between the 2023 and 2024 budgets, forecast PRRT revenue was downgraded by more than $3 billion over five years. Between last year’s budget and the December MYEFO, receipt forecasts fell a further $1.9 billion.
The government will blame falling energy prices, but the Asian price of gas is currently above where it was in mid-2023, even if it’s a fraction of the 2022 price when the Morrison government, in its last budget, forecast $2.4 billion a year from the PRRT. Over the next four years, Labor’s “reformed” PRRT is expected to generate on average just $200 million more a year in revenue compared to 2019 forecasts, when the gas price was a third of its current level.
Who’d have guessed that allowing large corporations to dictate how much tax they pay ends up with them paying less tax?
WA is going to bankrupt the East Coast economy in a reverse takeover of its energy assets that is equivalent to an act of war.
The East should invade and restructure WA before the mining barons hand Australia entirely to China.
