The Hand That Was Never Fed

In Perth in recent days, in a hotel function room, the Chamber of Minerals and Energy and the country’s largest gas and mining companies sat down with the Premier and the Prime Minister and told them, with no apparent embarrassment, not to bite the hand that feeds them. The headline writers obliged. The hand has been remarkably ungenerous to the people who own the resource.

Norway and Australia were given the same gift in roughly the same decades. Both discovered enormous offshore hydrocarbons. Norway built a fund. That fund now holds around two trillion United States dollars, approaching four hundred thousand dollars per citizen, and the Norwegian state captures around half to sixty per cent of the profits from the resource at source through taxation, with further capture through direct ownership stakes. Australia built a lobby. Our Future Fund holds about two hundred and twenty-six billion dollars, was not capitalised by resource revenues, exists primarily to cover public service superannuation, and the Commonwealth’s effective take on liquefied natural gas exports has been calculated by independent analysts at under ten per cent of export value. The lobby has been honest about its preferences. When the country attempted to build something closer to the Norwegian settlement, with the Resource Super Profits Tax in 2010 and the Mineral Resource Rent Tax in 2012, the lobby destroyed both within years. The breakfast in Perth this week was the same dynamic, ten years on.

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The Norwegian outcome was not a gift of geography. It was a settlement made early, defended consistently, and held for decades against exactly the kind of pressure being applied in Perth this week. We did not make that settlement, and the one we attempted was not allowed to survive. The cost of that does not land on an abstract national balance sheet but on your power bill, your rent, the schools your grandchildren will or will not attend, and the decommissioning liability of ageing offshore infrastructure that current modelling suggests is likely to fall heavily on taxpayers by mid-century. The hand has fed the sector. The sector has not, in any architectural sense, fed us back.

What Norway built is not impossible to build. It is only impossible to build later than now, and a little more impossible after every breakfast like the one in Perth this week.

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