Gas Tax Debate Heats Up: What’s Being Proposed — and Why It Matters to WA

Australia is in the middle of a major debate about how much the nation should earn from exporting its gas. Think tanks, unions and political parties are now calling for a simple 25% tax on gas exports — a move they say could raise billions for public services and help bring down domestic energy prices.

The Australia Institute, the ACTU and the Greens are now pushing for a simple 25% tax on the value of gas exports. The Australia Institute estimates such a levy could raise $17 billion annually, while the ACTU argues it would also increase domestic gas supply and help bring down energy prices. The Greens want the PRRT abolished entirely and replaced with the levy.

Last night at the H&C Urban Winery in Fremantle, the Australia Institute’s co-CEO Leanne Minshull moderated a lively discussion before a packed audience about ‘how we can stop the gas industry destroying our environment and ripping us off’. A key proposal discussed was the levying of the 25% tax on gas exports. Speakers included: Dr Richard Dennis, co-CEO of the Australia Institute and prominent Australian economist, author and public policy commentator; Greta Carroll, Fossil Fuel Campaigner, Conservation Council of WA; Lucy Peach, Musician, Artist and Author; and Rhys Lopez, Owner at Evil Mega Corporation who has worked for more than two decades in the WA craft beer industry.

Credit Gayle O’Leary

Why Has This Debate Erupted?

Australia is one of the world’s largest LNG exporters, yet the Commonwealth collects surprisingly little revenue from the industry.

Under the current system — the Petroleum Resource Rent Tax (PRRT) — companies pay tax only after recovering their costs. Generous deductions, uplift rates and accounting rules mean that many LNG projects pay relatively little or no PRRT at all.

Recent analysis by the Australia Institute shows:

• $170 billion in gas exports over four years paid no royalties and no PRRT.

• PRRT revenue is at a three‑year low.

• Australians pay four times more in HECS/HELP repayments than the gas industry pays in PRRT. 

This has fuelled calls for a simpler, harder‑to‑avoid tax.

The Australia Institute’s Proposal: A Flat 25% Export Tax

The Australia Institute — a prominent independent think tank — argues the PRRT is “broken” and should be replaced entirely.

They propose –

• A 25% tax on the value of gas exports (not profits).

• No deductions, no loopholes, no uplift rates.

• Apply it across all LNG export projects.

The Australia Institute argue it’s needed –

• To ensure Australians get a fair return for finite national resources.

• To prevent multinationals from shifting profits offshore.

• To simplify a system that has become “impossible to reform”.

Some estimate the revenue impact of the proposed tax will raise $17 billion per year.

The Australia Institute say the tax would bring Australia closer to Norway and Qatar, which collect far more from their gas industries.

2 days ago The Australia Institute said –

‘Every week the federal government delays implementing a 25% gas export tax costs the Australian public around $350 million in revenue, new research from The Australia Institute reveals.

‘A new Gas Giveaway Tracker, unveiled today by The Australia Institute, shows the revenue that is being lost, in real time, while the government does not implement a 25% gas export tax.’

The ACTU’s Proposal: Same 25% Tax, Different Framing

The ACTU – the Australian Council of Trade Unions – has adopted the same 25% export levy proposal, but emphasises its impact on domestic energy prices.

Their argument, supported by the Australia Institute, is that –

• Gas companies currently export uncontracted gas to the global spot market, pushing up local prices.

• A 25% export tax would incentivise companies to sell more gas domestically, lowering prices for households and businesses. 

The revenue impact is estimated by the Australia Institute at $12.5 billion per year. 

Advocates contend it could fund –

• Triple Commonwealth housing spending

• Double public school funding

• Increase childcare subsidies by 75%

• Cut pharmaceutical prescription costs

• Even eliminate HECS/HELP debt

The Greens’ position is to abolish the PRRT entirely

The Greens support the 25% export tax but go further.

Their proposal is to –

• Scrap the PRRT altogether.

• Introduce a permanent 25% levy on all gas export revenue.

• Use the revenue to fund climate transition, household energy support, and public services.

Their critique, shared by others, is that –

• The PRRT is “riddled with loopholes”.

• Gas companies pay “almost no tax” despite record profits.

• Households have faced tripled gas prices and doubled electricity prices since LNG exports expanded. 

2 days ago The Greens said –

‘The Australian Greens push to tax gas exports at least 25% is gaining momentum, with a newly won Select Committee to look at taxing Australia’s oil and gas, setting the ground for changes in the May budget.

‘The Select Committee will be chaired by Greens spokesperson for resources, Senator Steph Hodgins-May, who will seek to dismantle the gas industry’s excuses for not paying billions in taxes despite soaring windfall profits.’

Andrew Hastie MP

5 days ago, The Guardian reported that Liberal frontbencher Andrew Hastie says he is open to a new 25% tax on soaring gas profits as part of a Scandinavian-style sovereign wealth fund to strengthen the federal budget amid the global energy crisis.

The Albanese Government has asked Treasury to model options for the May Budget

From all reports, the modelling looks at –

• A 25% export levy

• A windfall‑profits tax during global price spikes

• PRRT reform (tightening deductions, reducing uplift rates, changing valuation rules)

A Senate inquiry — led by the Greens but supported by Labor — is examining whether Australia is getting a fair return from its gas resources.

So What Does All This Mean for Western Australia?

WA is the engine room of Australia’s LNG industry, with major export terminals at:

• Karratha (North West Shelf)

• Wheatstone

• Gorgon

• Pluto.

The Australia Institute says WA alone accounts for 78% of gas exported royalty‑free. 

The implications for WA would appear to be that –

• A 25% export tax would generate billions from WA‑based projects.

• It could shift more gas into the Australian domestic market, potentially easing local energy prices.

• It may also affect investment decisions for future LNG expansions.

For Fremantle — a port city deeply connected to maritime trade — it may be said that the debate underscores how much value flows offshore through LNG exports, and how little returns to the Commonwealth and the State.

So, What’s at Stake?

Supporters say a 25% export tax would:

• Deliver a fairer return for Australians

• Reduce domestic gas and electricity prices

• Fund major public services

• Prevent multinationals from gaming the tax system

Critics (mainly industry) argue it could:

• Discourage future investment

• Undermine long‑term LNG contracts

• Reduce Australia’s competitiveness.

The political momentum, however, seems clearly to be shifting toward simplification and higher returns.

One might say the 25% export tax proposal is a lot like motherhood, hard to argue against!

By Michael Barker, Editor, Fremantle Shipping News

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