I’m here before you because in March I committed to the Senate that Origin would increase our investment in Australia if the Enterprise Tax Plan was enacted.
Thank you for the opportunity to appear before you this afternoon.
This commitment is based on my belief that lower corporate taxes will improve Australia’s competitiveness, leading to greater investment, and will ultimately lead to more jobs and higher wages. Origin is a proud Australian company; we employ close to 5,500 Australians, across operations mainly on the east coast, and in the 2017 financial year 98 percent of our income was generated within Australia.
Origin has got a strong record when it comes to the transparency of our financial reporting. We report under the Voluntary Tax Transparency Code and we voluntarily report our tax contributions each year.
Up until recently, Origin had paid company tax each year. Since 2015 Origin has not paid income tax. In this period, Origin has incurred losses which have largely arisen from large investments, primarily from the $25 billion Australia Pacific LNG project. Our investment in this major Australian project did create 10,000 jobs at the peak of its construction and now contributes the equivalent of 30 percent of the east coast gas supply. But the project has also contributed to our financial losses while it was under development.
The impact of this has been shared by other stakeholders. Our shareholders have also experienced both a reduction in our share price and the suspension of dividends.
I am pleased to say that today our financial performance is improving, and this means we expect to be paying tax again very soon, possibly as early as this financial year.
We intend to continue investing in growth projects in the future in Australia. Origin operates in competitive markets, including the highly competitive global market for gas production.
The Senate should not underestimate how competitive the global economy is when it comes to securing funds for investment. It is important that Origin has a competitive cost of capital to allow us to invest in our pipeline of projects. The corporate tax rate is one important factor, among many, that influences Origin’s investment decisions.
Origin also invests alongside international investors in joint venture projects, which is very common in the gas sector. International investors have choices when it comes to which projects and economies to invest in around the world. We need to be able to attract that capital as our joint venture partners.
Origin believes the Enterprise Tax Plan is good public policy. It will contribute to our international competitiveness and that will be good for investment, and in turn our workforce, our customers and our economy.
Frank Calabria, CEO
Group Manager, External Affairs
Mobile: +61 428 967 166