Treasurer Jim Chalmers and Finance Minister Katy Gallagher Announce Changes Ahead of Budget Tipped to be at or Near Surplus
Key Highlights :
Treasurer Jim Chalmers and finance minister Katy Gallagher have announced major changes ahead of Tuesday’s budget, which is expected to be at or near surplus. The two major measures include capping deductions to collect $2.4bn more in petroleum resource rent tax over four years and boosting community services by $4bn through fairer indexation of wage costs.
Under the changes to the PRRT, the Albanese government will accept a recommendation from Treasury to limit the proportion of PRRT assessable income that can be offset by deductions to 90%. This change, to take effect from 1 July, will bring forward the date that liquefied natural gas projects are expected to pay PRRT. In all, the government will implement eight of the 11 recommendations of Treasury’s gas transfer pricing review and eight of the Callaghan review.
The $2.4bn over four years expected from Labor’s PRRT measure is less than alternatives proposed by the Grattan Institute and the Greens. The Grattan Institute estimates that changing the method of pricing for gas could raise up to $4bn a year and introducing a 10% commonwealth royalty on offshore gas a further $4bn. The Greens want the government to eliminate $284bn of accumulated credits that allow gas companies to reduce their tax liability.
The other major measure announced by Chalmers and Gallagher is to address government funding for services not keeping up with rising wage costs. The key change is to remove the five-year averaging of the wage component of the indexation calculation so that indexation better reflects what is happening in the economy. Services to benefit from the measure include the Medicare benefits schedule, commonwealth home support, affordable housing and homelessness, mental health, First Nations health, community legal services and services to reduce violence against women.
The other revenue-raising measures in the budget include the multinational tax crackdown, details of which will be revealed on Tuesday, the tobacco excise rise and “slightly less generous” superannuation tax concessions for earnings on balances over $3m.
The Albanese government is committed to the job of budget repair, and the changes announced today will support this effort while also providing vital services to Australians. The measures will ensure a greater return to taxpayers from the offshore LNG industry, while limiting impacts on investment incentives and risks to future supply. These changes will help build a stronger, fairer and more resilient economy.
