RELATED: Farmers in focus of royalty debate
ROYALTIES are set to rev up gas growth in South Australia, according to the new plan from Premier Jay Weatherill, but the experience in Queensland raises questions over the benefit of the new scheme.
Along with investment in battery storage and an emergency supply of gas fired power, Mr Weatherill wants farmers to open their gates to gas explorers. He has offered landholders 10 per cent of the state’s royalties, which would net them 1pc of the state’s royalty revenue (see infographic).
In Queensland, where gas production has exploded, landholders do not share in royalties. There, state government collected $36 million in royalty payments from the state’s 5127 producing gas wells.
Under the Weatherill royalty regime, Queensland’s royalties would have delivered about $700 per well at a 1pc share.
Queensland’s current regime of individual Conduct and Compensation Agreements industry has paid $238m in cash to landholders, with access ramping up in the mid-2000s resulting in a total of 5100 agreements with 2200 individual landholders.
The Australian Petroleum Production and Exploration Association has welcomed SA’s royalty scheme, and stressed it was a redistribution from state revenue, not an increase in gas company payments.
Nationals Leader Barnaby Joyce, party colleague and Resources Minister Matt Canavan and Energy Minister Josh Frydenberg also praised the move.
Like Liquid Natural Gas exports, royalty revenue can be fluid, and even frozen.
Last year, Gladstone, Queensland export consortium APLNG lodged a judicial review of royalties, arguing rates should reflect the sharp drop in the global oil price and Queensland Resources Minister Anthony Lynham announced a freeze on the royalty rate to encourage industry growth.
Landholder group Lock the Gate, which has organised gas opposition across the country, labelled the royalty scheme a “political wedge” aimed at environmental protections.
National campaign coordinator Carmel Flint said landholder compensation should to be upfront and transparent.
“If the Nationals are serious about standing up for landholders they would stop the systematic evasions of tax and royalties by gas companies.
“They would put in place national protections against unconventional gas drilling for important farmland and water resources,” Ms Flint said.
"The best thing that government could do to immediately improve the position of landholders is to protect important farmland and water resources from drilling and stop gas companies putting gag clauses on landholders, which prevents them discussing access agreements with their neighbours.”