APPEA recently released a report undertaken by energy research and consultancy Wood Mackenzie. The report highlighted that the industry’s success from 2009 to 2012 was predicated on relatively few regulatory and fiscal changes in the previous decade, which provided a strong foundation for a wave of unprecedented investment.
The scale of this investment, including the establishment of LNG projects in the Territory was worth approximately $350 billion Australia wide and has delivered direct and indirect economic benefits to the Australian economy.
In the immediate term, the benefit has come from direct spending into local communities while the full taxation benefits to be accrued in the latter half of this decade.
Wood Mackenzie Vice President Energy Consulting, Asia Pacific Chris Graham said: “Our analysis found the stability of the regulatory and fiscal environment in the years prior to investment was key to oil and gas majors with strong balance sheets and development capability making long-term commitments to the country.
“However, against the backdrop of a challenging macroeconomic environment and lower commodity prices, Australian fiscal and regulatory volatility has increased at a time when continued stability would be highly beneficial.”
While focused on the oil and gas industry, the findings also show regulatory instability, intervention and uncertainty, coupled with Australia being considered to be a high-cost destination for business, has reduced the investment appetite, is also relevant for many other industries in the Territory.
The Territory has an opportunity to secure a new wave investment in gas and stable regulatory and fiscal environment is crucial for recovery. While the report was completed prior to understanding the full impacts of COVID-19, and the decline of the oil price, it remains relevant as Australia shifts focus to economic recovery and global reintegration.
A lack of investment will have economic flow-on effects to communities and businesses we work with, making it counter-productive to the economic recovery phase that this country will need to embark on.
A copy of the report can be found here.