A heated debate over Australia’s fossil fuel taxation regime has moved into the Senate inquiry stage, with policy analysts and activists arguing that a new 25 percent tax on gas exports could unlock billions in annual public revenue and fix a long-running inequity in how the country values its natural resources.
The inquiry was convened to examine Australia’s existing gas tax frameworks, amid growing cross-political pressure to either introduce the new export tax or raise the Petroleum Resource Rent Tax (PRRT) on extraordinary windfall profits earned by gas producers. Industry groups have pushed back hard against these proposals, warning that higher taxes would threaten domestic energy security and damage long-standing trade relationships with key Asian customers.
Speaking to the inquiry this week, Richard Denniss, executive director of progressive think tank the Australia Institute, laid out a striking new finding from the organization’s research: the Japanese government collects more annual tax revenue from imported Australian gas than the entire Australian government collects from exporting the same resource. Denniss noted that the Japanese government pulls in roughly $8 billion annually in combined taxes from imported coal and gas, a large share of which comes from Australia, one of Japan’s largest energy suppliers.
Denniss framed the proposed 25 percent export tax as a once-in-a-generation chance to correct this imbalance, arguing that parliament has a rare opportunity to bridge partisan divides on an issue that has resonated across the political spectrum. He stressed that the tax would not drive up energy costs for Japan or other export customers, pointing to Norway’s heavily taxed gas sector as evidence that global market pricing insulates buyers from exporting nation tax changes. “There’s no Norway premium for Norwegian gas, which is heavily taxed. All of the gas is selling at the same world price,” Denniss explained. He added that if Japan were concerned about domestic energy prices, it could simply lower its own import tariffs to offset any impact. Beyond revenue, Denniss argued the tax would boost domestic gas supply by incentivizing exporters to sell more domestically, driving down local gas prices for Australian households and businesses.
The Australia Institute estimates the 25 percent export tax would generate as much as $17 billion in new annual government revenue. Denniss also pushed back on industry claims that the gas sector is a major driver of Australian employment, noting that the industry directly employs only around 18,000 people – far fewer than the 100,000 Australians working at McDonald’s. He added that nurses collectively pay more in annual income tax than the entire gas industry pays in corporate taxes.
Adam Bandt, former leader of the Australian Greens and current chief executive of the Australian Conservation Foundation, who is also appearing before the inquiry, laid out one potential use for the new revenue: permanently free public transport across Australia. Bandt argued that forcing gas corporations to pay their fair share of tax would be wildly popular, saying “They would be erecting statues in every town square for the first prime minister that makes the gas corporations pay their fair share of tax and uses it to fund free public transport, grow the industries of the future or pay for the clean up after cyclones and floods.” He noted that there is broad public support for a full review of Australia’s outdated gas tax rules.
Konrad Benjamin, a former schoolteacher and founder of grassroots advocacy group Punters Politics, told the inquiry that many ordinary Australian voters feel they are being exploited by the current low-tax regime for gas producers. “We, millions of regular Aussies, are now paying attention, and we understand a few things that we might not have understood before,” Benjamin said. “We understand that Australia’s gas is incredibly valuable. We understand that we’re giving most of it away for free to foreign corporations. We understand that those same foreign corporations pay close to bugger-all tax.” He questioned why, as a major resource holder, Australia is failing to capture the economic benefits of its own natural gas, especially as governments constantly claim they cannot afford to increase funding for public services like schools amid global economic volatility.
Opponents of the new tax have raised a number of concerns, warning that the policy could jeopardize Australia’s critical trade relationships with major Asian gas importers, which are key economic partners for Australia. Industry groups also reaffirm their position that higher taxes would undermine investment in domestic energy production and threaten long-term national energy security.