<a href="https://www.apartments.com.au/developers/capital-corporation">Capital Corporation</a> has announced that its <a href="https://www.apartments.com.au/new-townhouses/lovedale-farm-1054-1184-wine-country-drive-lovedale-nsw-2325">Lovedale Farm</a> residential, resort and golf project has secured $24.6 million in sales in just three weeks since the opening of its display home, underscoring the appetite for premium lifestyle property in the Hunter Valley countryside.

The sales milestone has been driven by a diverse mix of buyers, including owner-occupiers and investors from Sydney, Newcastle and the local Hunter region, purchasing both land-only lots and house and land packages across the development.

<img alt="Lovedale" data-entity-type="file" data-entity-uuid="e173edc9-e60e-4f19-a060-9dc4421a3233" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/LovedaleFarm_20250215-1.jpg?VersionId=1LY6CvOaD.Dzrt8tWpWxXtPyfchixNIo" />

&nbsp;

The result builds on the momentum generated at the display home opening on 22 March, which attracted more than 460 attendees.

With house and land pricing from $1.14 million, Lovedale Farm continues to attract strong interest from buyers seeking a premium lifestyle offering at a compelling price point. The development’s vision, a championship golf course, future epicurean village and access to the Hunter Valley’s celebrated wine country, has resonated with a broad buyer profile, from first-time investors to those looking to make the move and call the Hunter Valley home.

<img alt="Lovedale Farm records $21.4 million in sales in three weeks" data-entity-type="file" data-entity-uuid="b358e789-e1eb-40ed-8105-ed5c8297136f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/20260321LovedaleFarmDisplayHomeOpening--6.jpg?VersionId=6GUO8TNnxuELONrsM6n9imDB6oc82Bor" />

Jim Hunter, Managing Director of Capital Corporation said the response since opening the display home has been encouraging.

"To reach $24.6 million in sales in just three weeks speaks to the genuine demand for a lifestyle community of this calibre in the Hunter Valley," Hunter says.

"We’re seeing buyers from across the region and beyond, including investors who recognise the long-term value, and owner-occupiers who simply want to live somewhere truly special.

“Lovedale Farm is two decades in the making, and the market’s response is everything we hoped for. We’re excited to see these first buyers become part of the Lovedale Farm story from the very beginning."

<img alt="Lovedale" data-entity-type="file" data-entity-uuid="54d985cf-2ac2-400b-ac02-4401f3421ac7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/20260321LovedaleFarmDisplayHomeOpening--5.jpg?VersionId=3866bPoqpLZsm.3ACg9EafAr1W3miC_f" />

&nbsp;

Spanning 240 hectares on Wine Country Drive in <a href="https://www.apartments.com.au/developments/lovedale-nsw-2325">Lovedale</a>, the $1 billion development is expected to deliver around 1,250 jobs during construction and inject more than $300 million into the local economy. The first 200 homes and championship 18-hole golf course are anticipated for completion in late 2027.

Capital Corporation has also lodged development plans for the Lovedale Farm clubhouse, set to become a vibrant hub for residents and the wider Hunter Valley community. Further releases are planned for later this year.

[smartcode_project_cta:default project_id=14476]

Joel Robinson

Lovedale Farm display home opening triggers $24.6 million in sales in three weeks

Prominent Malaysian developer <a href="https://www.apartments.com.au/developers/osk-property">OSK Property</a> has unveiled <a href="https://www.apartments.com.au/new-apartments/aura-at-melbourne-square-7-hoff-boulevard-southbank-vic-3006">Aura</a>, the next stage of its $3.5 billion Melbourne Square precinct in Southbank, continuing its push into wellness-led, amenity-rich apartment living.

The $800 million tower, planned for 7 Hoff Boulevard, will rise 67 storeys and deliver 673 apartments, with COX Architecture drawing on both Japanese design principles and Australia’s natural landscape to shape the building’s identity. A rectangular grid aesthetic defines the building’s exterior, with COX drawing design cues from New York high-rises and Tokyo’s skyline.

Aura builds on a growing trend in high-density living, where wellness is no longer an add-on but central to the product. The development is structured around four key pillars, combining calm, minimalist residences with layered communal spaces, landscaped gardens, and a suite of wellness amenities designed to support both physical and mental wellbeing.

[smartcode_project:default project_id=151921 project_image_fid=367465]

At the core of the project is what OSK describes as a vertical wellness ecosystem, a multi-level approach to amenity that integrates health, lifestyle, and social spaces throughout the building rather than confining them to a single level.

The main resident hub, the Aura Club on level seven, will include a pool, cold plunge, spa, gym, Pilates and yoga studios, alongside more lifestyle-driven inclusions like a golf simulator, music rooms, library, and work-from-home spaces. Above, a series of higher-level amenity zones, including the Meridian Club and Cumulus Club, introduce more refined, social and retreat-style environments, with private dining, lounges, and premium wellness spaces positioned to take advantage of city views.

[smartcode_project:default project_id=151921 project_image_fid=367467]

The residences themselves will largely include balconies, a key design move in a market increasingly focused on natural light, airflow, and connection to the outdoors. Views will extend across the CBD, the Arts Precinct, Royal Botanic Gardens, and beyond.

Aura also introduces approximately 1,600 sqm of retail across the lower levels, further activating the Melbourne Square precinct, which already includes Kennedy Park, a Woolworths, childcare, and a growing mix of hospitality operators.

[smartcode_project:default project_id=151921 project_image_fid=367474]

“Aura stands tall as an exemplar of holistic wellness – its focus on social, physical and mental health culminate in a building that is calming, restorative and relaxing, where residents will have their own sanctuary within the well-connected and sought-after <a href="https://www.apartments.com.au/developments/southbank-vic-3006">Southbank</a>," says&nbsp;OSK Property CEO Chong Boon Woon.

“We have been very encouraged by the market’s response to the BLVD offering, and we know there is a strong demand for the level of amenity, service and design that the Melbourne Square precinct is known for.

“Complemented by work-from-home lounges for professionals, family friendly outdoor garden spaces, and state-of-the-art fitness and wellness facilities, Aura will continue our focus on maximising physical, emotional, and mental wellbeing,” he said.&nbsp;

[smartcode_project:default project_id=151921 project_image_fid=367475]

The project follows the strong performance of BLVD, which is now around 80 per cent sold, and reinforces OSK Property’s long-term commitment to Melbourne Square as a fully integrated, mixed-use precinct.

Construction is expected to commence in late 2026.

[smartcode_project_cta:default project_id=151921]

OSK unveils AURA, the latest stage in Southbank's $3.5 billion Melbourne Square precinct

National developer Time &amp; Place appears to have settled on a design for its long-anticipated Potts Point project.

After several years of back and forth with local council and the NSW Government, the developer, which has spent seven years targeting the former The Chimes site on Macleay Street, has now progressed its plans.

Following a concept design submission last year by SJB, Time &amp; Place has lodged a full State Significant Development Application with the NSW Government, this time for a scheme designed by Kerry Hill Architects.

<img alt="Time &amp; Place" data-entity-type="file" data-entity-uuid="504d2a27-d65f-4227-8189-1e35e3376e62" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-20%20at%209.38.24%E2%80%AFAM.png?VersionId=_XqFKATYHF30KnVByPxhaI9UBzmkmfn7" />

The 16-storey proposal includes 44 apartments, 21 of which will be build-to-sell. These will comprise 19 three-bedroom apartments and two four-bedroom units.

More than 50 per cent of the development will be dedicated to affordable housing, with 23 studio apartments to be delivered in line with the NSW Government’s Housing SEPP.

Kerry Hill Architects said the proposal is driven by a strong response to place.

“Our proposal for a new residential building for Potts Point in Sydney is driven by a deep consideration of place,” the practice said in its submission.

“This operates on multiple levels, including a landscape approach that reinstates endemic flora of the Sydney peninsula and provides a ground-floor garden for residents, reconnecting the site to its pre-European history. A brick podium further strengthens this relationship to context, integrating planting and fine bronze detailing that references the predominant material language of Macleay Street.”

The three-level podium will be topped by a communal resident space, featuring a covered pool designed to receive direct afternoon sun in winter, a neighbouring reflection pool, dining and event areas oriented to maximise sunset views, and an outdoor exercise zone.

<img alt="Time &amp; Place" data-entity-type="file" data-entity-uuid="8d3eedc1-babb-44a3-bd96-d8a42f3adf1f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-20%20at%209.37.48%E2%80%AFAM.png?VersionId=Ii7.4dvqNatu5GQi6bhqNjAswrMB998." />

The design also incorporates highly crafted shopfronts and a clearly defined residential entry to activate the street. Juliette balconies to the podium residences will provide passive surveillance and a strong sense of habitation.

Above, the larger apartments are housed within a light-coloured masonry and bronze tower.

“The tower steps back in a series of gently curved volumes that reference the rich Art Deco context of Macleay Street,” the architects said. “Carefully calibrated vertical fins frame the views while providing privacy and a sense of refuge.”

<img alt="Time &amp; Place" data-entity-type="file" data-entity-uuid="6fab60f4-3140-4469-b47a-48c781e0a30b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-20%20at%209.28.44%E2%80%AFAM.png?VersionId=e5XxrM3kzdASdKlcIACHAHbOSZhSKC9O" />

Time &amp; Place has been one of the most active developers nationally in the last 12 to 24 months. Late last year they completed&nbsp;The Queensbridge in&nbsp;<a href="https://www.apartments.com.au/developments/southbank-vic-3006">Southbank</a>, a mixed-use tower with 353 apartments and a hotel. They are currently selling Park Modern, 246 apartments near the famous Botanic Gardens in South Melbourne.

The developer has approval for The Burke, a mixed-use project in&nbsp;<a href="https://www.apartments.com.au/new-apartments/glen-iris-vic-3146">Glen Iris</a>&nbsp;being delivered in partnership with Woolworths. The 60 apartments, positioned above a new Woolworths supermarket, are expected to launch in the coming months. Time &amp; Place is also progressing plans for the redevelopment of&nbsp;<a href="https://www.apartments.com.au/developments/northcote-vic-3070">Northcote</a>&nbsp;Plaza, and have recently submitted plans for a <a href="https://www.apartments.com.au/news/vic/time-place-unveils-plans-22-storey-south-melbourne-tower">22-storey tower</a>, another in South Melbourne.

In&nbsp;<a href="https://www.apartments.com.au/developments/sydney-nsw">Sydney</a>, the developer has two projects in Manly: Two Tides, which is currently under construction, and an ultra high-end building on&nbsp;<a href="https://www.apartments.com.au/buildings/shoreline-manly-beach-89-90-north-steyne-manly">North Steyne</a>, fronting the beach. It is also continuing to work through the redevelopment of The Chimes building on Macleay Street in&nbsp;<a href="https://www.apartments.com.au/developments/potts-point-nsw-2011">Potts Point</a>, as well as Marlborough House, the redevelopment of the original David Jones warehouse building in&nbsp;<a href="https://www.apartments.com.au/developments/surry-hills-nsw-2010">Surry Hills</a>.

First look: Time & Place settles on design for The Chimes, Potts Point redevelopment

<a href="https://www.apartments.com.au/developers/develotek">Develotek</a> is joining the likes of TOGA, Deicorp, and One Global Capital, betting on a boom in Five Dock ahead of the 2032 mooted opening of the Five Dock Metro Station.

Develotek, which is currently developing Bianca on the Drummoyne waterfront and has plans approved for a tower in Chatswood, has filed a State Significant Development Application for a <a href="https://www.apartments.com.au/new-apartments/79-81-queens-road-five-dock-nsw-2046">two-building project in the evolving Kings Bay precinct</a>.

The buildings, one more boutique just five storeys and the other 26 storeys, will rise from an 3,158 sqm site across&nbsp;79–81 Queens Road and 2–8 Spencer Street, will home 134 one-, two-, and three-bedroom apartments, above ground-floor retail and five basement levels of parking.

A key component of the proposal is the inclusion of 15 per cent of residential floor space as in-fill affordable housing, unlocking additional height and density under the Housing SEPP.

<img alt="First Look: Develotek lodges State Significant shop top housing project in Five Dock precinct" data-entity-type="file" data-entity-uuid="3ee31bf7-75ba-4bc5-b190-49885193219f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/podium_2.png?VersionId=730UbrduuwK3C1sO28RHjiLPUPqXqjkh" />

Designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a>, the scheme adopts a podium-and-tower configuration, with a five-storey street wall along Queens Road transitioning to a 26-storey tower set deeper into the site. The ground plane prioritises activation and permeability, with retail frontages and a new through-site link connecting Queens Road to Spencer Street.

At the upper levels, the tower façade has been conceived using a modular system to support prefabrication and reduce construction waste, while improving build efficiency. The splayed form draws on the geometry of surrounding industrial rooftops, reinterpreting the area’s heritage in a contemporary expression while also helping to reduce solar heat gain to east and west-facing apartments.

“This project aspires to transform a former industrial site into a connected, resilient and people-focused urban community, grounded in Country, shaped by history, and designed to enrich everyday life within the evolving Kings Bay Precinct,” said John Walsh, Principal at Plus Studio.

The proposal reflects the broader transformation of the Kings Bay Precinct under the Parramatta Road Corridor Urban Transformation Strategy, marking a shift from its industrial past to a higher-density, mixed-use urban neighbourhood.

<img alt="First Look: Develotek lodges State Significant shop top housing project in Five Dock precinct" data-entity-type="file" data-entity-uuid="abde734c-1e31-4a97-a1d2-fa9bcf31c380" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/building%20podium.png?VersionId=fNUupP6u146yEytQT31kKVRxwtACgPpP" />

Develotek is emerging as an active participant in the state’s affordable housing-led uplift pathway. The developer recently secured approval for a 34-storey mixed-use tower in Chatswood, where it similarly leveraged the in-fill affordable housing provisions to increase scale and deliver a 101-unit scheme with dedicated affordable apartments.

Their entry into Five Dock places them alongside a growing list of developers targeting the suburb ahead of its anticipated transport uplift, with Sydney Metro set to extend into the area. Major players including TOGA, Deicorp, and One Global Capital are all progressing large-scale precinct-style developments nearby, collectively reshaping the low-rise industrial fabric into a higher-density mixed-use corridor.

The Five Dock site sits within the Kings Bay Precinct, a key renewal area under the Parramatta Road Corridor Urban Transformation Strategy, where planning controls support significant uplift tied to affordable housing delivery. The consolidated 3,158 sqm site is currently occupied by low-rise industrial uses, including warehouses and vehicle workshops, earmarked for transition.

First Look: Develotek joins in Five Dock apartment boom

Ascot’s Racecourse Road continues to be a hive of activity for Brisbane developers.

Following Fortis and GRAYA, which are both preparing new projects along the key strip connecting Kingsford Smith Drive and Eagle Farm Racecourse, local developer <a href="https://www.apartments.com.au/developers/skyhold">Skyhold</a> is the latest to lodge plans for its own development.

The group is proposing One One Two Residences, a boutique project comprising just seven apartments, named after its address at 112 Racecourse Road.

The proposal outlines a five-storey building on an 810 sqm site. The built form slightly exceeds the four-storey expectation under the neighbourhood plan, aligning instead with the emerging character of the strip. As the planning report notes, “the locality is characterised by a transition toward medium-rise residential development, with a number of recent developments… above the stipulated height limits.”

<img alt="First Look: Skyhold lodges plans for boutique Ascot apartments as Racecourse Road revival gathers pace" data-entity-type="file" data-entity-uuid="ec577631-8c51-4163-960e-e7b3a77d655b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Ascot.png?VersionId=iAzQ46D4Uu1UqiS0mVnlcy9jeFKBpJIj" />

Designed by 111 with landscape architecture by <a href="https://www.apartments.com.au/landscape-architect/paul-bangay-garden-design">Paul Bangay Studio</a>, the scheme adopts a layered architectural approach with strong articulation and a subtropical response. Deep balconies, integrated planters, and a mix of masonry and textured finishes define the façade, while upper-level setbacks reduce perceived bulk. The architectural statement describes “a series of horizontally expressed layers, defined by deep balconies and a consistent robust material palette,” aimed at delivering a refined streetscape presence.

Apartments are configured as large-format residences, including multiple three-bedroom layouts and a full-floor penthouse, supported by ground-level parking. A rooftop terrace will provide communal amenities including a pool and landscaped recreation areas. The design prioritises privacy, natural ventilation, and greenery, with planting integrated across all levels to soften the building form and contribute to the public realm.

<img alt="First Look: Skyhold lodges plans for boutique Ascot apartments as Racecourse Road revival gathers pace" data-entity-type="file" data-entity-uuid="1e1219bd-b45a-4d7f-bbc7-7207d7b2fc94" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Ascot%20entry.png?VersionId=JIoUOLMgQ5xWpEF0etEI3ffIoIVjD7gO" />

The proposal sits within the Racecourse Road precinct, a key mixed-use spine in Ascot that continues to attract renewed development interest.

Later this year national developer Fortis will launch its own boutique development, which, pending council approvals, will be 16 apartments designed by Koichi Takada Architects, just down the street.

“Racecourse Road is going through a massive revitalisation and we’re proud to be a part of that transformation,” said Fortis's QLD General Manager, Dan Boman.

Nearby, GRAYA is advancing its larger-scale The Gallery, a mixed-use shop-top housing project designed to act as a “catalytic project for Racecourse Road.”

First Look: Racecourse Road, Hamilton revitalization to continue as Skyhold joins the party

<html><body>
Australia’s east coast gas users are paying prices significantly above export parity prices, the ACCC’s latest gas report reveals.
The ACCC’s Gas Inquiry 2017-2025 Interim Report, released today, shows that prices offered to domestic gas users in late 2019 and early 2020 ranged from $8 to $11/GJ.
While this was down slightly from the $9 to $12/GJ range observed earlier in 2019, this price decline was not in line with the significant and sustained drop in LNG netback prices, which were for 2021 delivery below $6/GJ by early 2020 and have been below $5.50 since May.
“The ACCC is very concerned with the widening gap between domestic and export parity prices, which will have an inevitable impact on Australia’s industrial sector during what is already a difficult economic period,” ACCC Chair Rod Sims said.
“Queensland LNG producers sold 18 LNG spot cargoes into international markets in late 2019 and early 2020, equivalent to more than 10 per cent of annual domestic east coast demand. This gas was sold at prices substantially below domestic gas price offers, showing the importance of our continuing work to understand the drivers behind the price levels we are seeing across the domestic market.”
“It is also clear that recent Australian contract gas prices do not reflect overseas forward prices.”
“I am yet to hear a compelling reason from LNG producers as to why domestic users are paying substantially higher prices than buyers in international markets.”
“When we have lower gas prices around the world, and the Australian market linked to world gas markets, it is vital that Australian gas users get the benefit.”
Recommendations to address price concerns
The ACCC recommends the extension of the existing Commonwealth Government’s Heads of Agreement with LNG producers, due to expire at the end of 2020, because of the demonstrated capacity of LNG producers to supply additional gas into the domestic market when needed.
“As well as extending this Heads of Agreement, we think the government should consider strengthening the agreement’s price commitments,” Mr Sims said.
“For example, reference could be made to LNG netback price expectations and the prices LNG exporters could expect to receive for uncontracted gas in overseas markets over the relevant period.”
“Extending the Heads of Agreement is one measure that can be adopted now. Further measures are also needed to ensure adequate supply of appropriately priced gas over the longer term,” Mr Sims said.
With the southern states facing the greatest risk of shortfall in the future, the ability of market participants to transport gas from Queensland into southern markets remains critical.
The ACCC therefore recommends governments consider whether further measures are needed to see timely investment in north-south transportation infrastructure particularly, or import terminals on the east coast.
The ACCC also recommends that governments seek to increase the diversity of suppliers when granting new tenements, as greater competition between suppliers would be more likely to bring down domestic prices. Measures such as active tenement management should also be used to ensure producers bring gas to market in a timely manner.
Gas supply for 2021 and COVID-19 impacts
Australia’s east coast gas market is expected to have sufficient supply in 2021, with the LNG producers in particular having surplus gas, but the risk of a shortfall in the southern states in the medium term has increased, the ACCC’s report finds.
More than 20 per cent of southern states’ production in 2021 is expected to come from undeveloped ‘2P’, or proven and probable, reserves. At the same time last year, only eight per cent of southern supply had been forecast to come from undeveloped 2P reserves in 2020.
“The impacts of COVID-19 and the collapse in oil prices are being felt at all levels of the gas supply chain, and they have highlighted key areas of dysfunction in the market,” Mr Sims said.
“The cumulative effect on gas users is significant and exacerbates the difficulties being experienced by many commercial and industrial users.”
The report is available at <a href="https://www.accc.gov.au/regulated-infrastructure/energy/gas-inquiry-2017-2025/july-2020-interim-report" target="_blank">Gas Inquiry</a>
</body></html>

j.ballantyne1990-6AQqhLzZaK

Domestic gas users paying too much: ACCC

<html><body>
EXPERT OBSERVATION
So worried is the government about the meagre income it is getting from gas during the middle of Australia’s biggest gas export boom that it asked an independent advisor to chair a review and is getting the treasury to run the ruler over his recommendations.
Australia gets paid for gas mined from under its waters by the “<a href="https://www.ato.gov.au/Business/Petroleum-resource-rent-tax/PRRT-concepts/" target="_blank">petroleum resource rent tax</a>” set up by the Hawke government in 1988.
But payments peaked at around <a href="https://treasury.gov.au/review/review-of-the-petroleum-resource-rent-tax/final-report" target="_blank">A$2.5 billion</a> in 2000-01. They are now less than half that, and much lower still as a share of the economy and as a share of gas exported.
The government’s December budget update predicts petroleum resource rent tax revenue of just <a href="https://budget.gov.au/2019-20/content/myefo/index.htm" target="_blank">$1.15 billion</a> this financial year, revised down from the $1.4 billion expected in the May budget.
It has pencilled in only $1.15 billion for each of the next three years.
Qatar, which exports the <a href="https://www.smh.com.au/business/the-economy/australia-tops-qatar-as-world-s-biggest-lng-exporter-20200106-p53p5h" target="_blank">about the same amount</a> of gas as Australia, is said to have got <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2019-04-01/tax-credits-for-oil-and-gas-giants-rise-to-324-billion/10959236" target="_blank">more than A$20 billion</a> in 2018.
Our tax is good in theory
The weak performance of the petroleum resource rent tax is all the odder because it has been held up as the gold standard for resource taxation.
The 2009 Henry Tax Review wanted to apply the model to iron ore and other minerals, which the Rudd government attempted to, announcing a <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/BudgetReview201011/TaxationRSPTax" target="_blank">resource super profit tax</a> in 2010.
The Gillard government cleaved it to what became the milder <a href="/news">minerals resource rent tax</a>, before it was abolished by the Abbott government in <a href="https://www.allens.com.au/insights-news/insights/2014/09/repeal-of-the-minerals-resource-rent-tax/" target="_blank">2014</a>.
The petroleum resource rent tax collects a share of the profit made from mining gas instead of charging a fixed royalty of the kind imposed by state governments for other minerals.
But the “profit” depends on the choice of the price at which the gas is “sold” from one part of the entity that mines it to another before it is processed and turned into liquid for export.
<h2>It’s not as good in practice</h2>
There is a regulated method to calculate the true “transfer price” for the purpose of determining the tax payable. If it produces too low a result (as it seems to have) too little profit will be recorded and too little tax will be charged.
The Turnbull government was concerned enough about what was being charged to set up a petroleum resource rent tax review headed by former treasury official <a href="https://treasury.gov.au/review/review-of-the-petroleum-resource-rent-tax" target="_blank">Mike Callighan</a> in 2016.
<img src="https://images.theconversation.com/files/315167/original/file-20200213-41656-19iriq0.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip" alt="">
<a class="source" href="https://www.theaustralian.com.au/nation/politics/tax-hike-on-gas-and-oil-on-cards-to-save-surplus/news-story/80728e8d4e4ee0c0b425cd543b770d84" target="_blank">The Australian , Saturday February 8, 2020</a>
Callahan identified <a href="https://treasury.gov.au/review/review-of-the-petroleum-resource-rent-tax" target="_blank">four reasons</a> for dwindling reported profits at a time of record production: declining oil and gas prices, declining production from older projects, the massive expenses involved in setting up new mega projects, and transfers of spending between projects for accounting purposes.
He also recommended an examination of the transfer pricing formula.
In 2018 Treasurer Josh Frydenberg <a href="https://treasury.gov.au/sites/default/files/2019-03/p2018-t339508-govt-response-PRRT.pdf" target="_blank">tightened</a> some of the provisions and asked the treasury to lead a <a href="https://treasury.gov.au/publication/p2015-t339508" target="_blank">review</a> of the formula that is due to report mid-year.
So large are the potential revenue gains that <a href="https://www.theaustralian.com.au/nation/politics/tax-hike-on-gas-and-oil-on-cards-to-save-surplus/news-story/80728e8d4e4ee0c0b425cd543b770d84" target="_blank">The Australian</a> newspaper has reported that they could keep the budget in surplus.
We calculate the price of gas strangely
To determine the transfer price at which gas from Commonwealth waters is transferred from the part of the entity that extracts it to the rest of the entity, the Australian government uses a method used nowhere else in the world, and certainly not by Australian states in the calculation of their royalties on minerals.
It adopted the method on the recommendation of accounting firm <a href="https://treasury.gov.au/sites/default/files/2019-04/c2019-t364690-attachment.doc" target="_blank">Arthur Anderson</a> in 1998, a few years before it was disgraced in the <a href="https://en.wikipedia.org/wiki/Arthur_Andersen" target="_blank">Enron scandal</a> in the United States and stopped using that name.
The method averages two prices – the “net-back” price, which is used elsewhere, and a bespoke “cost-plus price” which is used nowhere else and purports to be a measure of the cost of mining the gas, but which oddly excludes both the cost of exploring for the gas and the cost of the gas itself.
The more commonly-used (and usually larger) net-back price is calculated by working backwards from the price at which the product is sold to the end-user, subtracting the costs involved in getting it to that point.
Modelling I have conducted for a article co-authored with Machiel Mulder and Peter Perey in the <a href="http://www.unswlawjournal.unsw.edu.au/wp-content/uploads/2020/02/Kraal-et-al-Taxation-and-Pricing-of-Natural-Gas.pdf" target="_blank">UNSW Law Journal</a> finds that if the net-back price alone was used (as it is elsewhere) the big gas exporters would pay the government A$15.5 billion over the years between now and 2030, instead of the presently-expected $5.5 billion.
We shouldn’t value gas at zero
There is no obvious reason for the Australian government to value the gas itself at zero. The idea that its only value comes from the equipment, labour and technical know-how used to extract it wouldn’t be accepted in the United States or in any other place that charges for resources extracted and demands payment promptly upon extraction.
Fortunately, the government of Queensland continues with royalties for onshore gas and the government of Western Australia continues with royalties for North West Shelf gas.
If the treasury’s review of gas transfer pricing results in only fine-tuning the existing regulations it will miss the chance to get us a proper return on our resources. We own them and they are worth something.
Australians have a right to be paid what their resources are worth and to use that money to build government services or a budget surplus.
Listen to Dr Kraal discuss petroleum resource rent tax at Monash ‘<a href="https://www2.monash.edu/impact/podcasts/thought-capital/why-we-need-to-pay-attention-to-energy-justice/" target="_blank">Thought Capital</a>’
<a href="https://theconversation.com/profiles/diane-kraal-14610" target="_blank">Diane Kraal</a>, Senior Lecturer, Business Law and Taxation Dept, Monash Business School, <a href="https://theconversation.com/institutions/monash-university-1065" target="_blank">Monash University</a>
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/in-the-midst-of-an-lng-export-boom-why-are-we-getting-so-little-for-our-gas-131461" target="_blank">original article</a>.
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In the midst of an LNG export boom, why are we getting so little for our gas?

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GUEST OBSERVATION
Cold weather has arrived in eastern Australia, to the glee of those who enjoy skiing. But you don’t have to venture onto the slopes for cold to be a danger. With gas prices rising, many in the community are shivering while contemplating how big their next gas bill will be.
Eastern Australia’s gas market is rapidly changing, driven by the first exports of liquefied natural gas (LNG) from Queensland. And this is affecting the whole supply chain, from gas producers, to the way we use gas in our homes.
Gas was cheap, for decades
In Victoria, South Australia, and through to New South Wales, Queensland and Tasmania, gas has long been viewed as the preferred fuel for many applications - from industrial uses right down to warming our lounge rooms. Since the discovery of the massive Bass Strait oil and gas deposits off Victoria in the late 1960s, gas consumption across eastern Australia grew, decade after decade.
But despite these discoveries and growing production, the resource companies involved were often frustrated. While global crude oil prices went up and up, eastern Australian gas prices were stuck in the 1970s. Gas consumers enjoyed access to some of the cheapest gas in the developed world.
On the other hand, gas producers dared not complain too loudly. They often considered this gas nearly a waste product – interfering as it did with the speed at which the far more valuable crude oil and LPG could be drawn from the ground. If eastern Australia had been another jurisdiction such as Nigeria or North Dakota, this nuisance gas could have been quickly disposed of by flaring or venting. However, with some foresight, Australian industry regulators have generally discouraged such wasteful and environmentally damaging practices.
Faced with this constraint, what were the resource companies to do? Unlike crude oil, gas is costly to ship to the more lucrative markets in Japan and Korea, first requiring liquefaction at temperatures as low as minus 160C. Creating new demand “sinks” for gas in-country was one strategy. Pipelines were built to connect up all of the eastern states. Still, this “domestic” gas languished at a sales price far below that of crude oil.
Coal seam gas arrives
Then in the first decade of this century came the realisation that coal seam gas (CSG), located mostly in Queensland but also in New South Wales, could be produced in quantities far exceeding the demands of the staid domestic market, by a factor of three or more.
Following the examples of Western Australia and the Northern Territory, the only option for gas companies was to invest billions of dollars in, at last, building the first liquefaction and export facilities on Australia’s east coast.
For legacy gas producers, even those not directly involved in the LNG-export decisions, this was the dream come true. After decades, a buyers’ market rapidly shifted to become a sellers’ market. Where previously buyers would remind producers they would be happy to take that “waste product” off their hands, producers could now inject into supply contract negotiations the spectres of “world-parity pricing” and “high CSG production costs”.
Nowhere in the world had it ever occurred where an established, reasonably large domestic market, serving customers ranging from large industry to millions of homeowners, was suddenly eclipsed by the mammoth export-focused LNG industry.
Eastern Australia gas demand peaked - three years ago
Even before the launch of the first LNG export cargo from Queensland late last year, major gas buyers raised concerns about future gas costs and contractual availability. The Australian Competition and Consumer Commission is examining transparency and barriers to competition in the gas industry.
When the New South Wales upper house held an inquiry into gas supplies earlier this year, it gave us, at the University of Melbourne Energy Institute, the opportunity to present our analysis of declining future gas demand in that state. Now Victoria’s upper house is likewise having an inquiry where we will present aspects of our extended research into gas supply and demand across all of eastern Australia.
The eastern Australian gas market has experienced significant upheaval and will continue to change over the next ten years. Data from the Australian Energy Market Operator indicates that the volume of gas used in eastern Australia peaked three years ago.
Gas demand will continue to decline across all sectors. In the electricity-generation sector, with rising gas prices, the abolition of the carbon price, and a surplus of coal-fired generation, gas will only be sparingly used. The Australian Energy Market Operator is also forecasting a steep drop in the amount of gas used by industry.
Do try this at home: fuel-switching from gas to electricity
The amount of gas used in buildings will also decline. As we shiver here in Melbourne, how would you like to reduce your heating costs by up to, say, 70%? If interested, you have to do two things: (1) turn your gas heater to “off” and (2) turn your reverse cycle air conditioner to “on” – on heating mode of course!
<a href="/images/2015/07/20/image-20150717-5067-1y3854o.jpeg" target="_blank">Click to enlarge</a>
<img src="/images/2015/07/20/image-20150717-5067-1y3854o.jpeg" alt=""> 
 
In my home we did that for the first time this winter. Our savings are remarkable, though not surprising nor different to what others in the community are reporting. As an example, during two particularly blustery days I found I could comfortably heat my house one day with gas at an energy-only cost of A$4.80 and then do it the next day with my air conditioner at a cost of just A$1.50. Our savings across the full heating season will add up to hundreds of dollars.
Results in other homes will depend on factors including what you pay for electricity and gas, the efficiencies of your gas heater and air conditioner, where your heat sources are located within your home, and individual comfort and convenience preferences. But it should not be long before word gets out to the 4.4 million Australian homes that already have at least one reverse-cycle air conditioner.
Previously I reported on the similarly large savings possible by using an efficient heat pump to heat water, especially if you have excess self-generated solar electricity. Add an induction cooktop and there is no economic need to connect gas to most Australian homes<a href="https://www.ata.org.au/news/are-we-still-cooking-with-gas">.</a> Businesses are springing up that offer “all-electric” home conversions” to people interested in making the switch.
Collectively, homes are large consumers of eastern Australian gas. This coming “second-era of Australian home electrification” will have a big impact on gas and electricity supply-demand dynamics over the next decade.
Tim Forcey is energy advisor for the Melbourne Energy Institute and also an author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/tim-forcey-104740" target="_blank">here</a>.
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