Petroleum Resource Rent Tax changes clear first hurdle but big fight looms as Coalition mulls position on gas

The political fight over the Federal Government’s $2.4 billion gas tax will drag on for at least another month as the Opposition resists pressure to wave through the changes.

Labor’s shake-up of the Petroleum Resource Rent Tax passed the Lower House without even being put to a vote on Monday.

However, the Government faces a fight to get it through the Upper House, with the Coalition refusing to declare a final position until a Senate inquiry into the legislation reports on April 18.

The hold out comes despite the gas industry wanting the change to pass in order to end years of uncertainty about the future of the tax.

The path for a PRRT deal between the major parties appeared to open last week after Treasurer Jim Chalmers promised quicker decisions on gas approvals, including via changes to clarify consultation requirements for proponents.

The Coalition pushed for the change among a list of demands it wanted met in exchange for its support for the tax hike, announced almost 12 months ago in Labor’s 2023-24 budget.

The demands were detailed in a letter sent to Dr Chalmers in mid-November.

Dr Chalmers’ response, which came more than 100 days later, has failed to immediately win over the opposition, which will consider the Senate inquiry report before committing to a position.

If the Coalition resolves to oppose the PRRT changes then Labor would be forced to negotiate with the Greens, who have previously pushed for the tax to be doubled.

In a statement to The West Australian, shadow treasurer Angus Taylor warned Labor it would be effectively handing the “future of Australia’s gas industry to the Greens” if it refused to work with the Coalition.

Mr Taylor tried unsuccessfully on Monday to split the legislation in two, carving off the PRRT component from unrelated measures linked to cracking down on consultants after the PwC scandal.

He said Labor’s decision to lump the two together was a “cynical wedge” that showed how “deeply unserious” the Government was about negotiating with the Opposition.

“The Government has a choice — to work with the Coalition on sensible proposals or hand the future of Australia’s gas industry to the Greens,” Mr Taylor said.

It is understood that the Opposition will again attempt to split the Bill during debate in the Senate.

Assistant Treasurer Stephen Jones said splitting the Bill would delay the process of extracting more tax from the gas companies.

“It will delay the Australian people getting a benefit from the resources that we all own,” he said.