Energy prices will not rise as a result of Labor’s proposed resource super profit tax, despite industry claims they will, according to an early government analysis.
A Senate hearing was Tuesday told by the Department of Resources, Energy and Tourism head of energy Brendan Morling, that preliminary work on the impact of the tax on coal and gas prices was in line with Treasury assertions.
“The RSPT is a tax on super profits only, as such it should not affect prices at which gas and coal are sold into the domestic market, including for energy use,” he told a Senate estimates hearing in Canberra on Tuesday.
The 40 per cent tax is planned to hit a company when its profits go over a six per cent return, and energy companies have said that when their price goes up, they’ll pass it on.
But Morling said that the prices energy companies pay shouldn’t necessarily go up.
“If those prices are not affected then you wouldn’t expect any impact on electricity prices.
“Our preliminary work on that issue is consistent with that position.”
Origin Energy boss Grant King has said the tax will put upward pressure on gas prices.
That analysis was not shared by the department’s energy division, Mr Morling said.
“We are aware of those reports but we don’t know how Mr King and others have come to those conclusions.
“We’ve done our own analysis, it’s still preliminary at this stage and we’ve come to the conclusion we’ve reached.”
Preliminary work on the impact of the proposed tax worked around state royalty regimes which were effectively replaced by the super profits tax, Mr Morling said.
The work was continuing and the department had reasonably regular contact with industry associations but not at Mr King’s level, he said.
Department head won’t comment on investment
Department of Resources, Energy and Tourism Secretary Drew Clarke refused to be drawn by Liberal senators about the effect of the tax on investment in the sector.
Mr Clarke said it was not his responsibility to comment on the responsibilities of other departments, in this case Treasury.
He said he was unwilling to speculate on the impact of the tax at other rates on the sector.
Three officers from the resources department were seconded to assist Treasury with information while the tax was being formulated.
But Mr Clarke said he was not privy to the consultation between the officers with Treasury.
“The officers had access to all of the information and resources within this department to assist them with their task while they were working in Treasury and they exercised access but they were
not working for this department, they were seconded to treasury,” he said.
“Our role is to respond to requests for information from our three seconding officers.”