Call for federal royalties for regions scheme in PRRT review

The national funding program would see a percentage of mining royalties hived-off from the PRRT to be reinvested in projects like infrastructure building, to help resuscitate long-suffering non-metropolitan communities.

Under leader Brendon Grylls, the WA Nationals famously engineered a state-based royalties for regions scheme, using balance of power negotiations in 2008, which has generated about $1 billion per year in regional investments.

While the WA scheme could provide a template for recommendations on how to operate a federal royalties for regions program, Senator O’Sullivan said Mr Grylls didn’t invent its principle.

“This isn’t going to come from Brendon Grylls - it’s going to come from people on the ground,” he said.

“We’ll stir up the foot soldiers of the bush.

“There’s no question this goodness comes out of the regions and it should be reinvested back in the regions.”

The PRRT review was unveiled by Treasurer Scott Morrison last week to examine the tax system’s integrity and protect government revenue that’s collected from oil and gas mining.

Led by independent expert Michael Callaghan and backed by the Commonwealth Treasury, the inquiry aims to report back its findings to the federal government by April next year making recommendations on reforming the PRRT.

It will address reasons for the rapid decline in revenues and whether the tax system is working, as it was intended, to collect billions of dollars from multi-national mining companies that utilise complex taxation arrangements.

Mr Morrison says the review’s timing will also ensure any suggested reforms could be considered in the 2017-18 budget process.

“We will ensure that the PRRT provides an equitable return to the Australian community from the recovery of petroleum resources without discouraging investment in exploration and development that is vital to the industry,” he said.

Mr Morrison says PRRT revenue has halved since 2012-13 to $800 million while crude oil excise has also fallen by more than half.

But it’s understood revenue from the tax could exceed multiple billions of dollars in years ahead, with an increase in oil and gas prices.

The mining boom is also continuing to progress further from the investment and development phase towards increased extraction, as more projects are constructed and come online.

The WA royalties for regions scheme has been funded by extracting 25 per cent of the state's mining and petroleum royalty revenue.

While declining to nominate an exact figure, Senator O’Sullivan said a “very, very significant percentage” of PRRT tax revenue needed to be returned to the regions.

“I don’t know what the percentage is – that’s open for debate – but unless we start to reinvest in regional and rural Australia we’re going to be left with only the production that comes out of the cities,” he said.

“I will fight to the death.

“I have tied my right wrist to my left ankle in the trench and I’m not retreating on any of this, along with many of my colleagues.

“This mood is starting to emerge in many colleagues and we’re going to fight back in the hardest possible form.”

Senator O’Sullivan said a push by regional politicians for a federal royalties for regions program to come out of the PRRT review, would involve a call to arms of “foot soldiers” in regional Australia, to back the movement.

He said regional business leaders, mayors, social leaders, farming groups and peak industry groups have all had a “gutful of being left behind and us going out to raid their bloody pantries and doing nothing to replenish it”.

“If you want to know the principle of it, go and get the story book of the Little Red Hen and read it from front to back,” he said.

Senator O’Sullivan said the federal government needed to reinvest a fair percentage of the PRRT in regional areas, to build the roads, schools, infrastructure and rural health services that are “absolutely essential to attract people back into these places to work and live”.

He said a federal royalties for regions scheme would help to drive the long-term investments needed to restore and build confidence in regional communities.

“It’ll have the support of all politicians whose constituency spans provincial Australia which I say covers rural, regional and remote Australia,” he said.

“The time has come – this is line in the sand stuff.

“We’re going to be pushing this back through the party room and I’ll be surprised if my colleagues don’t stand shoulder to shoulder here.”

Senator O’Sullivan said the government had been “stripping” investment from regional Australia for decades, including core policy areas of education, health, policing and infrastructure.

“Tens of thousands of kilometres of rail line have been stripped up out in the bush during my adult life-time,” he said.

Senator O’Sullivan said despite investments in some new government programs, like SkyMuster, regional areas had been forced to endure “inferior” communication, health and education services.

“We have families now who have not been able to educate their kids because the internet’s not good enough,” he said.

“You can’t just continue to draw the nourishment out of rural Australia and not reinvest some of it back into this space.

“That’s a principle of business; you just keep harvesting from one of your businesses but not paint the building and maintain the plumbing and the electricity and nourishing the staff who work for you because that has a predictable end.”