WA: Tax changes could hurt oil and gas industry: minister

AAP General News (Australia)
04-18-1999
WA: Tax changes could hurt oil and gas industry: minister

PERTH, April 18 AAP - Western Australian energy minister Colin Barnett has used the eve of
a major oil and gas conference to attack aspects of the Federal Government's review on tax
reform.

Launching a study of WA's oil and gas industry here today, Mr Barnett warned that the
industry could be seriously threatened by the proposal to remove accelerated depreciation as
canvassed under the Ralph Review reform of business taxation.

"The oil and gas industry in WA produces 26 per cent of Australia's total value of minerals
and energy," Mr Barnett said.

"The level of investment could be threatened by the introduction of some tax changes
canvassed in the Ralph Review."

Mr Barnett argued the removal of accelerated depreciation, which allows companies to write
off the development costs of new projects over time, would mean many marginal resource
projects would not get developed.

"Accelerated depreciation improves the rate of return of projects by three to seven per
cent - that's enough for marginal projects to go ahead," he said.

Mr Barnett later told journalists that the Federal Government was aware of the state's view
on the issue, a view supported by other states.

"All of the mining and energy ministers in Australia are agreed on this - that the removal
of accelerated depreciation will be significant for our natural resources industry," he said.

His comments came at the launch of a report on the impact of the oil and gas industry on
WA, commissioned by the Australian Petroleum Production and Exploration Association (APPEA),
which holds its annual conference in Perth this week.

The report found that the oil and gas industry had become WA's largest resource sector with
the annual value of production exceeding $5 billion.

AAP jlc/pc/cjh/de

KEYWORD: TAX OIL

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