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Chevron not happy with Australian tax

 

Oil and gas giant Chevron's Australian boss has complained that Australia's taxes are too high and challenged the local services industry to lift its game.

Chevron Australia's managing director Roy Krzywosinski's comments come in the same week as reports that the Australian Tax Office has taken the company to the Federal Court for $322 million in unpaid taxes and penalties from 2004 to 2008.

He did not address that issue at the Australian Petroleum Production and Exploration Association conference on Wednesday.

However he did identify high taxes, or the need for a globally competitive taxations system, and wages as two policy settings he would most like to see changed by government.

Otherwise Australia risked missing out on a potential $100 billion second wave of investment in liquefied natural gas projects and associated economic benefits, following the recent $250 billion capital investment boom.

Natural gas exports were touted by Industry and Science Minister Ian Macfarlane at the APPEA conference earlier in the week as a chance for the Australian economy to claw some of the export income lost due to iron ore and coal price falls.

The biggest issue facing Chevron, as it leads $80 billion of investment building the massive Gorgon and Wheatstone LNG projects in Western Australia, is an inflexible industrial relations system, said Mr Krzywosinski.

"We need to have market driven regulation that encourages market driven compensation - wages and things of that nature that make us a little more competitive," he said.

"As we move forward in operations the ongoing challenge will change more on the tax side."

Australian companies face a 30 per cent corporate tax rate, which is above the US, UK and New Zealand's, although Federal Treasurer Joe Hockey devoted significant resources in this month's budget to tackling multinational tax avoidance.

Other obstacles to success for the LNG industry, said Mr Krzywosinski, were red and green tape regulation and productivity and competitiveness, with the latter a thinly veiled swipe at the services industry.

"Developing a capable and responsive world-class services sector will help us demonstrate Australia is investment ready for the next wave of opportunity, positioning us as the preferred global LNG supplier," Mr Krzywosinski said.

The LNG operators had low opinions of Australia's services sector's ability to support them as the industry became the world's largest in LNG, according to research from consultants Accenture.

Large resources services group WorleyParson's chief executive Andrew Wood defended the industry, saying there should not be any concerns about its expertise or ability to provide labour, considering Australia had been exporting LNG for 25 years.

The massive numbers involved in building the projects were greatly reduced when they were operating - the Australian LNG plants already in production employ only 3,000 to 3,500 people.

Many skills from welders to project managers to electricians were transferable between metal refining or chemical manufacturing plants, he said.

Better collaboration between suppliers and operators rather than the traditional separation of roles would cut costs, he said.