Gas tax review confirms nation faces decade wait for revenue

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Multinational gas companies will soon sell an annual $50 billion worth of n liquefied natural gas to foreign markets, but the nation will have to wait more than a decade for any revenue boost and some projects will never pay a cent in tax for the resources they extract.
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A report prepared for the Turnbull government into the petroleum resource rent tax has confirmed fears, first revealed by Fairfax Media in 2015, that revenue from offshore gas will continue to flatline until at least 2027.

Despite that, Treasurer Scott Morrison insisted on Friday that ns were not being shortchanged, but said the government would consider some changes to the system.

The review of the PRRT by former treasury official Mike Callaghan has acknowledged there are systemic problems and recommended changes to toughen the system for new LNG projects.

But, in a clear victory for the $200 billion industry, he shied away from urging any major changes for projects already past the investment stage, including Chevron’s giant Gorgon and Wheatstone ventures and Shell’s Prelude project.

The Callaghan report was released amid the political wrangling over east coast gas supply and on the same day the Senate inquiry into corporate tax avoidance grilled LNG bosses in Perth.

Chevron chief executive Nigel Hearne outlined for the first time when the combined $80 billion Gorgon and Wheatstone projects would start paying company tax and PRRT, claiming there was an “incorrect perception” in the public that the company would not pay its fair share.

Chevron predicts it will start paying the petroleum resource rent tax some time between 2029 and 2035, he said, and would eventually contribute between $60 billion and $140 billion over a 50-year project lifespan.

The company – which has paid no company tax for five of the past seven years – would become a top-five taxpayer by the middle of the next decade, he said

“Don’t judge us by the first few years of the boom; judge us by the life cycle of the project,” he said.

Mr Callaghan’s report – which recommends the Treasury take months to engage in a “considered, comprehensive and consultative process” over changes – has provided Treasurer Scott Morrison the political cover to retreat from prior signals the government would present a PRRT fix in the May budget.

When he announced the Callaghan review in November, Mr Morrison said of the PRRT “we think it is a problem”, and set the time frame to allow for budget measures.

But on Friday he said any changes would be considered “outside the current budget”.

“The report finds the decline in PRRT revenue does not, in itself, indicate the n community is being shortchanged in receiving an equitable return from the development of its resources,” Mr Morrison said.

The petroleum industry mounted a fierce lobbying effort against changes to the PRRT.

A month after the review was announced, Prime Minister Malcolm Turnbull’s then deputy chief-of-staff, Brad Burke, was hired by Shell, one of the companies that met Mr Callaghan and government ministers.

Former resources minister Ian Macfarlane, who now heads the Queensland Resources Council, met Mr Callaghan, as did Craig Emerson who helped design the PRRT with economist Ross Garnaut for the Hawke Labor government.

The PRRT is based on capturing “super profits”, something that concerns tax transparency campaigners because of the ease with which multinational resource companies can move money between jurisdictions.

Last week, Chevron lost a Federal Court appeal in a profit-shifting case brought against it by the n Tax Office. The court found the company avoided paying $300 million in tax in via steep interest payments on a $2.5 billion inter-company loan made from the low-tax jurisdiction of Delaware in the United States.

In his 180-page report, Mr Callaghan found the PRRT, which had been designed with oil extraction in mind, worked differently for LNG, which requires larger investments and “much longer periods before they become cash positive”.

The “uplift rates” applied to exploration and capital costs – which are carried forward and grow by up to 15 per cent a year – allow companies to write off their investments against positive cash flow when a project starts producing.

The industry holds a stockpile of $238 billion in tax credits, which some academics believe will shield major companies from paying any PRRT for decades.

Mr Callaghan confirmed this, saying: “High uplift rates for deductions, combined with periods of subdued oil prices, may mean that deductions compound over the life of a project such that the project may never pay PRRT.”

Modelling for the review found the sector would pay just $12 billion in PRRT by 2027. In that period, sales to such markets as Japan, South Korea and China could conservatively top $400 billion.

But Mr Callaghan found much more PRRT would be paid between 2027 and 2050, up to $105 billion in total, or $3.2 billion a year.

By comparison, Qatar, which is currently the world’s biggest LNG exporter, is forecast to take $26.6 billion through its flat, volume-based royalty in 2021, when it will sell the same amount of LNG as .

Mr Callaghan did not recommend implementing a royalty as companies had invested under the PRRT system.

“Any significant increase in the tax on existing petroleum projects may substantially increase perceptions of the fiscal risk associated with investments in and may deter future investment,” he said.

“Fiscal certainty is an important factor influencing a country’s investment attractiveness.”

Mr Callaghan split his recommendations in two, saying Treasury should rein in uplift rates applied to new projects, and the outcome could be “substantial changes to the PRRT regime”.

But for current projects he recommended a list of smaller changes, such as streamlining paperwork with the ATO.

The Tax Justice Network, which has spearheaded research into the PRRT, said the changes would make it easier for companies to claim deductions and transfer credits between projects.

“It appears reducing paperwork for multinational corporations has been prioritised over protecting the n community and our shared interest in these resources,” Tax Justice spokesman Jason Ward said.

“This report and the response from the Treasurer will only increase community concern over the integrity of the PRRT and represents a significant missed opportunity.”

Mr Callaghan is expected to be called to front the Senate inquiry looking at PRRT.

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Muslim MP falls victim to fake news over Anzac Day wreath

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‘s first female Muslim federal MP Anne Aly has fallen victim to fake news after an unsubstantiated story about her “refusal” to lay a wreath on Anzac Day appeared on a Facebook post.
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It’s a lesson on how fast rumour travels, gains traction and becomes the alternative truth – at least on social media.

It began after the Kim Vuga Love or Leave Party Facebook page made a post at 8.30pm on Anzac Day, headed “a must read”. It shared a story purportedly from a friend referred to as “Gary” who had been at a dawn service for the Wanneroo RSL sub branch in the northern suburbs of Perth. “Gary” says he was “taken aback” to hear that the local Member, Anne Aly, would not be presenting a wreath. The post was shared 218 times and had 72 comments and saw 114 people react. While most of the comments were abusive of the MP, there were a few in support saying Dr Aly had, in fact, been at another ceremony in her electorate.

Soon people started posting on Dr Aly’s official Facebook page asking her why she “refused” to lay the wreath.

Speaking to Fairfax Media, Dr Aly said it was “offensive” that some people would choose to politicise Anzac Day.

“I have several Anzac Day services in the electorate, but there are two main ones, one in Wanneroo and one in Ballajura,” Dr Aly said.

“Last year I went to Wanneroo, so this year I went to Ballajura, laid a wreath and gave a speech. [To] Wanneroo, I sent a wreath and had the state local member represent me. Then I found out that on social media people were saying I refused to lay a wreath at Wanneroo, which was absolutely not true.

“But apparently it has gotten bigger than Ben Hur. People have apparently rung up talkback radio on it.”

“Just the fact that there is a political party who are willing to politicise Anzac Day but at the same time, how ironic that they accuse me of disrespecting Anzac Day when they are the ones who are doing it” she said.

???”I think it is very offensive, particularly because I have such a high regard for the RSL, particularly because I have such a strong relationship with them, and such a high regard for our serving men and women and those who have served.”

In a subsequent post on the Kim Vuga Love or Leave Party Facebook page, the author defended her initial post.

“I stand by the facts that were presented to me by a Facebook friend having been present at the memorial in Anne Aly’s electorate,” the post said.

Giants show they are the greater Western

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GREATER WESTERN SYDNEY 3.3 6.3 8.6 11.9WESTERN BULLDOGS 2.4 6.12 7.17 9.19
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GOALS: GWS: Cameron 4, Patton 3, Greene 3, Lobb. Western Bulldogs: Stringer 3, Bontempelli 3, Daniel 2, Suckling.BEST: GWS: Mumford, Greene, Cameron, Haynes, Patton, Williams, Ward. Western Bulldogs: Bontempelli, Daniel, McRae, McLean, Stringer, Dahlhaus.INJURIES: GWS: Reid (hamstring), Haynes (groin). Western Bulldogs: Campbell (ankle) replaced in selected team by Dale. Liberatore (concussion)REPORTS: GWS: Greene for allegedly striking Daniel (Western Bulldogs) in third quarter.UMPIRES: Ryan, Meredith, Deboy.CROWD:14,048 at Manuka Oval.

External observers might label the Giants’ frantic two-point win against the inaccurate Bulldogs on their Friday night debut as revenge for last year’s heart-breaking preliminary final defeat.

But inside the four walls of GWS, as footy players and coaches are prone to saying this year, Friday’s triumph in front of 14,048 fans down in Canberra was more about 2017.

It was about keeping the pressure on unbeaten trio Adelaide, Geelong and Richmond. It was proving their contested game could match it with the best in the competition, particularly in the frenzy of a see-sawing fourth quarter. And it was showing the Friday night television viewers just what’s building out in the west of Sydney.

Some of these names are starting to get a household ring about them.

Toby Greene – the three-goal hero who knows just as well how to play the role as villain. He did so again here, belting Caleb Daniel high in the third quarter and could miss next Friday’s clash with St Kilda.

Jeremy Cameron helped himself to another four goals while Jonathon Patton kicked three, including a monstrous long bomb from hard up against the boundary line that proved to be the matchwinner. They all revelled in their Friday night debuts.

And then tireless ruckman Shane Mumford. Friday night fans know all about him from his days at Sydney, but in case they’d forgotten who he was, he turned in another vintage display.

He dominated the ruck and levelled Tom Liberatore with a crunching tackle early in the fourth term that led to the Bulldogs’ ball-winner being helped groggily from the ground.

“He just keeps on finding a way,” Giants coach Leon Cameron said of Mumford.

“It was an interesting duel tonight because he had to think his way through the second ruck in [Josh] Dunkley at times, and sometimes they’re actually harder to deal with than a second ruck coming in who is 200cm.

“They’re a very clever team the Bulldogs. You’ve got to give credit to them, they just play a really good team defence and they stifled us at times and we couldn’t move the ball like we wanted to.

“I thought out best quarter was probably our last, we found a way to keep the ball in our half of the ground which they clearly did to us in the first half.

“You’ve got to deal with that and it’s pleasing to have our first Friday night game and stand up and come out on top when things didn’t really work as well as you wanted to over the 120 minutes.”

It all came down to that pulsating final quarter, where the Giants desperately held on for the final five minutes after Jake Stringer snapped his third goal to reduce the margin to three points.

Tom Boyd shanked a late shot at goal from 45 metres out on a tight angle while Toby McLean missed a flying shot at goal late that would’ve handed the Bulldogs victory.

The contentious deliberate out of bounds rule came under the microscope again after a series of decisions that left supporters of both clubs scratching their heads, but it didn’t take the gloss off another brilliant clash between these two sides that again left Bulldogs coach Luke Beveridge bemoaning a lack of accuracy in front of goal.

“Some of them are really getable, and it’s just purely skill, we’ve got to work on it, our players have got to work on it,” Beveridge said.

“Our players who are missing or are not capitalising on their opportunities, we’ll hopefully get better over time. There’s a sheen of quality that you need, you don’t necessarily need brilliance but you do need a sheen of quality in your forward line.

“It’s going to be difficult to win these clutch games when you’re a bit inefficient, we just missed too many getable ones and then they got their tails up in the third quarter.

“It’s always going to be hard to beat them but tonight we had our chances.

“Both teams are evolving. Both camps consider themselves contenders.”

The Giants’ Friday night debut was an AFL promoter’s dream.

It pitted them against the Bulldogs, the 2016 premiers who were responsible for ending GWS’ season in last year’s preliminary final 216 days ago.

Both sides came into this with 4-1 records, and both had won six of their past seven games in Canberra.

The Bulldogs suffered a huge blow before the opening bounce when Tom Campbell was ruled out with an ankle injury, meaning ex-Giant Boyd was facing a daunting night in the ruck against Mumford.

But things fell Boyd’s way, momentarily, when Mumford went into the rooms midway through the first quarter nursing an injured right ankle. He received some treatment and returned before the first break with strapping around the offending area.

Fellow Giant Callan Ward went off with a glute injury before returning, while key defender Aidan Corr was off for even longer after tweaking the top of his left hamstring in the chilly, slippery conditions being thrown up by the nation’s capital. Corr also returned.

It was a busy opening term with Rory Lobb, Patton and Greene all majoring for the Giants.

The Bulldogs were slow to start but squared things up as the Giants went down on troops, and grabbed a pair of goals themselves through Matthew Suckling and Caleb Daniel.

Spearhead Cameron threatened to take the game by its scruff in the second term, booting three of his six pointers against the opponent that held him scoreless in last year’s preliminary final.

But Marcus Bontempelli kicked two timely majors and Stringer fired up, roving a stoppage and snapping truly from 15 metres before kicking his second a minute later.

VOTES

Shane Mumford (GWS) 8

Toby Greene (GWS) 8

Marcus Bontempelli (Western Bulldogs) 8

Jack Macrae (Western Bulldogs) 7

Dylan Shiel (GWS) 7

The worst investment advice property experts have ever had

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Worst house on the best street taking up the best spotBuying the best or worst house on a blockOff-the-plan buyers seeing losses and lacklustre growth
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Buying the worst house on the best street is a classic real estate adage, but it could be among the worst investment advice for those who don’t do their due diligence.

Crumbling houses being marketed as a “renovator’s delight” or a “blank canvas” may appear to be a bargain or an entry in to the area, but it might also require a buyer with deep pockets to do a thorough update.

Wakelin Property Advisory Richard Wakelin said buyers who purchase the worst house on the best street might need to spend a lot of money on rewiring, restumping, re-roofing or re-plumbling. The property might have “hidden costs” and also unfixable issues such as backing onto apartments or light industrial-type property, he said.

“It definitely falls into the lure of a renovator’s delight, and most people get badly caught out by what they have to do to get the foundations of the actual building right,” Mr Wakelin said.

Some property advisers point to seemingly attractive tax advantages and stamp duty concessions that come with buying off-the-plan, but buyers who overlook other fundamentals could find themselves stumbling into an investment pit hole.

Investor Neda Tesic, 32, was encourage by her ex-partner and a former financial advisor to buy an off-the-plan two-bedroom apartment in Maidstone, about eight kilometres west of Melbourne’s CBD.

She sold the property in 2015 for less than what she bought it for in 2008, during which house prices in the suburb took off.

“[They] talked about depreciation and I just took it for what it was, not realising the full story; in terms of how inflated it would be,” said Ms Tesic, who works in sales for an accounting software company. “It was so hard to get tenants in there as well because there were so many other apartments in the area.

“It was a very expensive lesson,” Ms Tesic said, adding that she would now take more time to research and look at comparable sales in the area.

Mr Wakelin said many poorly performing properties were marketed with tax advantages as their main selling point.

Tax attractions such as gearing strategies, depreciation allowances and stamp duty savings might assist the financing of an investment in early years, he added, but they should not be the primary reason to invest, because too often they mask the property’s scarcity value and propensity for capital growth.

While some investors try to time the market, many property experts argue it is better to buy when you can afford it.

“Time in the market” rather than “market timing” was the key, but investors needed to do their research very thoroughly, Mr Wakelin said. “Procrastination is the greatest thief of time.”

An investment offering high rental yields could also raise a red flag.

Allen Wargent Property Buyers principal Pete Wargent said the worst investments over the past decade in had been those where people had focused on the rental yields to the exclusion of almost everything else.

Though mining towns offered rental yields of 15 per cent or more during the mining boom until 2012, it reflected the risk in the asset, he said.

“A lot of people have been badly hurt, particularly since 2012, and I think some of the high-profile locations that have been hit have been small mining towns, but even in some larger areas like Gladstone have had some severe corrections.

“That’s probably been the worst advice in over the last 10 years.”

Sydney buyers’ agent Victor Kumar, director of Right Property Group, said one of his bad investments was a serviced apartment he bought in 2009, with the intention of hosting friends and family and using it as a holiday pad.

Though the gross rent could look really attractive, a lot it goes into the letting fee and running costs, Mr Kumar said, adding that serviced apartments were also very seasonal.

Dutton comments could raise Manus tensions: police chief

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PNG police commander David Yapu has expressed concern that Immigration Minister Peter Dutton has raised tensions on Manus Island with his comments about the behaviour of three refugees towards a young boy.
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Inspector Yapu has also rejected claims by Border Force Commissioner Roman Quaedvlieg that police were investigating the incident involving the boy and had sought witness statements and CCTV footage.

He told Fairfax Media police were only investigating the behaviour of military personnel who embarked on a violent rampage at the Manus Island detention centre on Good Friday.

“This is not in regard to the boy issue. The statements and the footage were provided to police only on the incident that happened on April 14,” Inspector Yapu said.

While police and witnesses say the Good Friday violence followed an altercation between detainees and military personnel on a soccer field, Mr Dutton maintains the incident with the boy “caused a lot of angst” and “elevated the tempo on the ground”.

The provincial police commander said Mr Dutton’s comments about the boy were making it harder for police to restore calm to the area within a navy base that surrounds the detention centre, where inmates are permitted to leave during daylight hours..

“After the recent [Good Friday] incident, we are trying to monitor the situation and get back the confidence [of the community and detainees] and get back to normalcy at the centre,” he said.

“This kind of thing can trigger an escalation. This is my fear.”

Mr Dutton has refused to retreat from his claims that the incident in which a boy was taken into the centre by three refugees elevated the mood on Manus and served as a catalyst for the violence.

While Mr Dutton initially said local residents were angry over this incident and “another alleged sexual assault”, he has since spoken of “a series of events”.

“We are concerned about some allegations of sexual behaviour by the asylum seekers toward girls and women on Manus,” he said on Thursday.

The three refugees have filed a formal complaint over Mr Dutton’s comments, insisting they took a poor boy into the centre with the permission of a guard and gave him a bag of fruit after he approached them asking for money or food.

“I grew up in a country that had war and bombs and fighting and all of these things and I was raised without a father,” one of the refugees who took the boy into the centre told ABC radio on Friday.

“I experienced hunger, I experienced being thirsty, I experienced poverty, and I know how it feels for a child to be hungry, and when I see that I cannot just close my eyes and not help.”

Inspector Yapu has dismissed the incident with the boy as a “dead issue”, saying there has been no report to police or complaint from the boy’s parents.

“I really don’t understand why people are making an issue out of that. It’s a very small thing and they are making a great issue out of it.”

When the inspector’s comments were put to the Department of Immigration and Border Protection, a spokesperson responded: “The department is aware that the incident in which a young child was found in the Manus regional processing centre has been referred to the Royal Papua New Guinea Constabulary.

“As such, it is not appropriate for us to comment further at this time. We refer you to the minister’s [Mr Dutton’s] public statements on this matter.”

Inspector Yapu said witness statements and footage gathered by police related only to the events of Good Friday. He has also defended the conduct of the asylum seekers and refugees who visit the province’s only town, East Lorengau.

“I’m on the ground,” he said. “I’ve been observing them. I’ve been monitoring them. They come freely to town, conduct their business, get on to the bus and go back to the centre. They’re safe.

“We have no personal grudges with them. The community don’t mind seeing them because they mind their own business.”

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