A recent Senate inquiry is examining the potential implementation of a tax on Australian gas exports, particularly liquefied natural gas (LNG), which could yield substantial annual revenue, estimated in the tens of billions of dollars. Advocacy for this tax is growing, with proponents arguing that it would not only fill government coffers but also help reduce domestic gas prices.
The Australia Institute has proposed a flat 25% tax on export revenues, suggesting it could generate $17 billion annually. Richard Denniss, the institute’s director, argued at the inquiry that such a tax would effectively address existing issues within the industry, contrasting it with the ineffectiveness of the current ‘windfall tax.’
Supporters believe that Australia’s tax regime should align more closely with that of other gas-rich countries like Norway and Qatar, which benefit significantly from their gas exports. Labor backbencher Ed Husic suggested that a gas export tax would be straightforward and offer clearer benefits to Australians, though Opposition Leader Angus Taylor expressed strong opposition, questioning whether such a tax would jeopardise the entire gas sector and the nation’s fuel security.
Critics from the gas industry warned that imposing a tax could deter future investments, with some projects potentially being abandoned as a result. They pointed out that the industry already contributed $21.9 billion in taxes in the previous year, emphasising that projects not realised do not yield tax revenue. Denniss dismissed this argument, citing examples of companies such as Japanese oil and gas firm INPEX pursuing opportunities in nations like Norway instead.
Konrad Benjamin, a popular commentator, echoed the sentiment that Australians are increasingly aware of how little the country gains in gas royalties relative to competitors. He affirmed that companies would still invest in Australia if it remained profitable, as evidenced by Norway’s experience.
Former Treasury secretary Ken Henry strongly backed the notion of increasing taxes on gas exports, urging action based on national interest rather than the status quo. The ongoing discussions about taxing gas correlate with the broader need for fiscal improvement in the budget.
Environment Minister Murray Watt reiterated that government policies concerning gas taxation remain unchanged, but the call for reform continues, punctuating the urgency of addressing revenue shortfalls in the national budget.