Labor has not ruled out raising a tax on gas companies profiting from the global energy crisis, but exporters warn it would leave Australia “more exposed” to future shocks.
Unions, the Greens, crossbenchers and One Nation are among those who want gas profits levied, with pressure mounting on Labor to respond to growing calls to reform the current tax system.
The Coalition and gas exporters seized on reports the government is exploring options to collect more tax from fuel profits, arguing the current energy crisis sparked by war in the Middle East was the “worst” time to act.
Yesterday, the ABC revealed the Department of Prime Minister and Cabinet had asked Treasury to model “new levy options” to tax windfall gas and thermal coal company profits ahead of the federal budget in May.
In the rationale for the request, which also included exploring reforms to the Petroleum Resources Rent Tax (PRRT), the department wrote that energy producers “should not benefit from high international prices at the expense of domestic customers”.
Bowen says tax changes the job of treasurer
Energy Minister Chris Bowen did not rule out a windfall tax on gas revenue or PRRT changes when repeatedly asked about the modelling.
He said tax reform was a matter for Treasurer Jim Chalmers, who he would “expect” was “working through potential options”.
“The budget will be delivered in May, and I will not be commenting on cabinet processes today, tomorrow or any time before budget day,” he said.
“And the budget will be delivered by the treasurer, not by the energy minister.”
Broad support to end gas ‘rip-off’
Increasing the tax on gas has support across the political spectrum, with One Nation last month announcing a policy to charge the industry royalties.
Greens leader senator Larissa Waters said she welcomed the government’s move to cost potential tax changes, and indicated the minor party would back any substantial reform.
“The time for tweaking has long passed,” she said.
Larissa Waters says her party will support gas tax legislation if it is brought before parliament.Â
 (AAP: Mick Tsikas)
Meanwhile, ACT independent senator David Pocock, who has been lobbying for the PRRT to be strengthened, said it was “encouraging” that Labor was modelling options.
“It looks like the government might finally be caving to the pressure myself, others on the crossbench, and especially Australians in communities across the country, have been putting on them to tax gas companies making wartime profits,” he said.
The Greens and Senator Pocock have said Australia should have a flat 25 per cent tax on all gas exports, which was the proposal also put forward by the Australian Council of Trade Unions (ACTU) last year.
David Pocock has joined members of the crossbench to call for a 25 per cent tax hike on gas profits. (ABC News: Matt Roberts)
The Australia Institute has estimated it would raise about $17 billion a year.
Currently, the government collects about $1.5 billion in annual revenue through the PRRT, which applies to offshore gas exports, which Senator Pocock has criticised as a “rip-off”.
LoadingGas companies warn of investment, security risk
Total taxes and royalties paid by the gas industry were $21.9 billion in 2024-25, according to the sector.
Shell Australia country chair Cecile Wake said energy security relied on ongoing investment in new supply, and warned any proposal contemplating further tax would “undermine investment and erode energy security”.
“Doing so would be short-sighted and opportunistic, particularly when the domestic gas market is well-supplied, and domestic gas prices remain materially below international pricing,” she said.
“Imposing a levy on LNG exports at this time would send the worst possible signals for investment in gas supply for the local market and to our regional trading partners, who need us more than ever, and who provide critical fuels to Australia.”
Coalition says gas tax will hurt fuel sector
The Coalition has also criticised the idea, with Shadow Treasurer Tim Wilson describing it as “next level denial” for Labor to think the answer to the fuel and energy crisis was new taxes.
“They will only freeze investment and stall private sector job growth,” he said.
Shadow Resources Minister Susan McDonald also warned a new tax would create uncertainty for the gas industry.
Susan McDonald said an extra tax on gas would create greater uncertainty. (ABC News: Jane Bardon)
“Instead of creating higher taxes and greater uncertainty, the government should look to its own out-of-control spending,” she said.
Australian Energy Producers chief executive Samantha McCulloch said it would be the “worst possible time” for Australia’s economy and energy security to impose a new retrospective tax on gas.
“Imposing higher taxes on Australian gas producers would stop investment in new gas supply, leading to gas shortfalls, higher energy prices, and the closure of Australian industries that rely on reliable and affordable gas,” she said.
Ms McCulloch also said the Middle East conflict had highlighted Australia’s “co-dependency” on regional neighbours for energy and food security.
“Australia’s reliable gas supply to the region underpins the energy security of key trade partners, and in turn Australia depends on the imported fuels and other essential imports from the region,” she said.
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