Mining risky in SE food bowl

A researcher with the independent think-tank based in Canberra, he delivered three information sessions at Mount Gambier, Penola and Kingston last week, hosted by the Limestone Coast Protection Alliance and Community Action for Sustainability.

Mr Ogge outlined what he said were the "misconceptions" about the mining industry's financial contribution to the economy and employment.

Apart from environmental concerns with groundwater pollution and drawdown of the aquifer, Mr Ogge said there were adverse social and financial impacts for agriculture, manufacturing and tourism.

He said mining did not simply have an additive effect to the local economy; the boom in the past couple of decades had come at the expense of other parts of the Australian economy.

He said Australia's gas industry paid a fraction of the average effective corporate tax rate of about 21 per cent.

"The gas industry, with all its deductions, pays about 6pc. They pay a petroleum resource rent tax of 8pc, but that is because of the super profits and is not intended to mean they should pay less corporate tax," Mr Ogge said.

The gas industry was also subject to royalties, but he said these needed to be put in perspective.

"In Qld, when all projects are operating at their peak in 2016-17, it will only be paying $450 million in royalties to the Qld government - so 1pc of Qld's revenue - and there is a big price tag attached, which is covering tens of thousands of kilometres of Qld with gas wells."

In contrast, Norway has recognised it is a finite resource and has taxed its gas industry at 78pc. It also has a state-owned stake in every venture.

Mr Ogge said this money had gone into a sovereign wealth fund worth $1.5 trillion for future generations whereas in Australia, these resources were nearly being given away.

"I was shocked when I read just a couple of days ago that the current SA government has offered a five-year royalty holiday to the gas industry in this state," he said.

"A lot of these wells aren't going to last five years - the people of this state own this resource and are not getting the returns."

Mr Ogge said there was no gas supply crisis and, while the prices were rising, it was being driven by strong export demand, not domestic usage.

"The entire east coast is part of the one pipeline network and so a gas company has a choice between selling to a local consumer for $4 gigajoule or exporting for a netback price of $12 per gigajoule," he said.

"If local consumers want to it, they have to match that price and that is what is driving up prices."

* Full report in Stock Journal, April 10, 2014 issue.