UPDATE: 7.45m The Federal Opposition plans to retain a key part of Labor's mining tax package, convinced it will generate billions of dollars in the decades ahead.
Shadow treasurer Joe Hockey has confirmed to The West Australian that the coalition would keep the Government's extension of the petroleum resource rent tax to onshore projects.
Until the introduction of the mining tax last year, the PRRT was restricted to offshore oil and gas projects including the North-West Shelf and Bass Strait.
By extending its footprint to onshore reserves, the PRRT will capture massive amounts of tax from the expanding coal seam gas sector in Queensland and NSW.
Treasurer Wayne Swan said in Canberra this morning it was a “staggering backflip” from the Opposition.
“They've adopted holus-bolus a substantial part of the the MRRT package,” he said.
“It just shows a level of hypocrisy in the Liberal Party that is simply breathtaking.”
Superannuation Minister Bill Shorten added that “imitation is the sincerest form of flattery”.
Mr Hockey yesterday said the coalition still intended abolishing the minerals resource rent tax and insisted the decision to keep the expanded PRRT would not come as a surprise to the mining industry. "The coalition has been consistent in its message that our abolition of the MRRT will not automatically extend to the PRRT," he said yesterday.
"Those in the industry paying PRRT have been generally comfortable with this."
Mr Hockey's comments point to a change of heart by the Opposition.
A June 2011 report by a Senate committee chaired by WA Liberal Mathias Cormann said the MRRT and the expanded PRRT should be scrapped because they were irretrievably broken. "The MRRT and expanded PRRT are a further intrusion of the Commonwealth into the revenue sphere of the Sates and Territories," the committee found.
"The MRRT and expanded PRRT are top-up taxes which will increase complexity and increase distortions in the market."
The DomGas Alliance told Senator Cormann's committee that extending the 40 per cent PRRT to onshore projects could make some projects uneconomic and lead to higher domestic gas prices.
The coalition's policy U-turn is being partly driven by the revenue on offer from the emerging natural gas sector.
The PRRT on offshore oil and gas has netted the Government $1.4 billion so far this year. The MRRT has collected just $126 million.
Buru Energy executive director Eric Streitberg said the coalition's move was disappointing.
He said companies had hoped the coalition would mimic its policy of repealing the mining tax with the PRRT onshore extension.