There is considerable interest in understanding the proportion of resources income that accrues to Australian households. Yet few such estimates, if any, exist. This paper quantifies the share of before tax profits from the Western Australian natural gas industry that remains in Australia and in the state. In contrast to previous studies, which narrowly focus on domestic ownership of resources companies, we focus on the share of profits remaining in Australia, taking tax and royalty payments into account. This aids an understanding of how the development of natural resources contributes to Australian living standards. We also estimate the share of profits from gas consumers that remain in the country, to give a fuller picture of Australian involvement in the Western Australian gas market. A detailed firm-by-firm database is constructed and used to calculate these shares. Around 47 per cent of before tax profits generated by WA gas producers are estimated to have accrued to Australian households in 2014. Gas projects currently under construction in the state rely heavily on foreign investment, and once these projects are operational, this share could be 34 per cent. Similarly, 45 per cent of before tax profits from gas users in the state are estimated to accrue to Australian households.
|Name||Economics Discussion Papers|