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Bad year for oil industry - increased regulation and taxes under Hawke government



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THE SENATE

PRESS RELEASE

SENATOR PETER DURACK, QC DEPUTY LEADER OF THE OPPOSITION IN THE SENATE SHADOW MINISTER FOR RESOURCES AND ENERGY ... .. ...677*85=

BAD YEAR FOR OIL INDUSTRY - INCREASED REGULATION AND TAXES UNDER HAWKE GOVERNMENT

"1985 has been a year of new taxes and further regulation for the oil industry."

‘I . .

Tax arrangements under the Coalition Government were relatively simple and provided incentives which led to a significant increase in oil exploration and development in the late seventies and early eighties.

However, new taxes and rules for exploration permits have beccme extremely complex under the Hawke Government.

Extension of the crude oil levy to 'Intermediate' and 'New' oil fields have made administration of the oil industry more difficult and costly.

Similarly, new taxes such as the RRT (Resource Rent Tax), RRR (Resources Rent Royalties) and Cash Bidding in particular have been major disincentives to the oil industry.

In addition the Keating Tax package will seriously affect the oil industry.

The fringe benefits tax to be imposed on the employer is a totally unjustified burden for an industry which in many cases has to provide subsidised houses and other possibilities for its employees.

The new Company Tax arrangements mean higher taxes for those who cannot take advantage of the new imputation proposals.

The significant reduction in off-shore oil exploration in 1985 demonstrates the parlous state of the industry.

This situation is totally unacceptable given the predicted reduction in oil production over the next few years.

Unless .more oil is found now, Australia will face major trade and revenue problems. '1

In these circumstances, Governments should be actively assisting oil exploration and development.

The oil industry has been forced to fight a rear guard action in 1985, against these further intrusions of Government.

Unfortunately, 1986 premises more regulation and further new taxes under the Hawke Government.

"This is occurring at a time of increasing uncertainty about oil prices when the industry needs more, not less, encouragement from Government to stay with exploration in Australia."

PERTH 18 DECEMBER 1985 CONTACT: ROB HADLER (062) 72 7088/72 7145

REPRESENTING IN THE SENATE — SHADOW MINISTER FOR DEFENCE, FOREIGN AFFAIRS A N D TRADE A N D SHADOW ATTORNEY-GENERAL

O I L EXPLORATION, PRODUCTION A N D RETAIL TAXES AND PERMIT A R R A N GEMENTS

The following lists pre and post Hawke Government oil e x ploration and tax a r r a n g e m e n t s .

. PRE-MARCH 1983 ,

- Old Oil Excise

- Work Programme for e x p l o r a t i o n permits

- Production Licence A r r a n g e m e n t s

: Federal and State Royalties on Production

- Federal Excise and State Franchise Fees on P e t r o l e u m |

Products y

. POST-MARCH 1983

' - Old, Intermediate and New Oil Excise

- RRT (profit related projects t a x )

- New Work Programme

: with and w i t h o u t RRT

- Cash Bonus Bidding (cash bid auction for oil exploration

p e r m i t s ) : wi t h and w i t h o u t RRT

- Production Licence A r r a n g e m e n t s

: Federal and State R o y a lties on Production

: RRR (profits related p r o ject tax w i t h Federal and

State revenue sharing agreement) - Retention Lease Arr a n g e m e n t s

- Federal Excise and State Franchise Fees on Petro l e u m

• Products - Customs Tariff (S tand-By Duties) .

O T H E R TAXES

Capital Gains Fringe Benefits imposed on the employer Increased c o m p a n y Tax and imputation arrangements

FUTURE?

- Signature Bonus Payments

- Retention Lease Premiums

- Production Sharing in T imor Sea

: Hydro- C a r b o n s Corporation.