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<\/p>\nKen Henry has been through all this before. Many times.<\/p>\n
Appearing before a Senate inquiry this week into gas resources taxes, the former Treasury Secretary and one-time National Australia Bank chairman returned to long familiar territory, urging Australia’s elected leaders to stop selling the country short.<\/p>\n
“Just do it, in the national interest, just do it,” he said, pausing for effect, “and stop the crap that the Australian public have put up with for decades now in respect of taxation of Australia’s finite resources.”<\/p>\n
By week’s end, Henry’s plea once again had fallen on deaf ears.<\/p>\n
Prime Minister Anthony Albanese quietly kyboshed calls for a 25 per cent tax on gas exports, at least in the upcoming federal budget, echoing criticism from the gas industry.<\/p>\n
The windfall profits tax, they have argued, would alienate key buyers such as Japan, Malaysia and South Korea, the very countries now prioritising liquid fuel supplies to Australia.<\/p>\n
<\/p>\n
Australia’s gas producers argue they already pay about $20 billion a year in tax. (ABC News: Brendan Esposito)<\/p>\n
Proponents have dismissed the argument. Buyers, they say, would be completely unaffected by the proposed new tax, arguing gas exporters are merely blowing smoke around the key issue.<\/p>\n
Our tax system, they claim, has failed to deliver the bounty from the nation’s riches to the owners, the Australian people.<\/p>\n
Gas prices<\/a><\/p>\n After a decade and a half of mostly failed threats from three prime ministers and constant surveillance by the competition regulator, the east coast gas export giants are suddenly putting Australians first.<\/p>\n In particular, the Petroleum Resources Rent Tax \u2014 once considered world leading tax policy \u2014 no longer works as intended, raising only a tiny fraction of the revenue that it should.<\/p>\n According to the gas giants, they pay substantial amounts of tax already, around $20 billion a year between them which would be imperilled if they had to pay an export tax.<\/p>\n But as Henry points out, all companies pay tax. The difference with resources is that the companies are exploiting natural endowments they don’t own and which can never be replaced.<\/p>\n “I put this proposition to you \u2014 I’ll sell your house, and I’ll give you 30 per cent, and keep the other 70 per cent, and you should be happy with that, because I’ve just converted an asset into cash.<\/p>\n “None of you would be stupid enough to do that,” he told the inquiry.<\/p>\n “Yet, that is what the Australian government and the Australian Parliament do in respect of our gas reserves.”<\/p>\n Running short of friends A drone’s view of Chevron’s Gorgon project on Barrow Island in Western Australia. (Supplied: Chevron)<\/p>\n As an industry, the gas exporters haven’t done themselves any favours with precious few allies in Canberra.<\/p>\n For years, the Australian Tax Office pursued Chevron through the courts over tax avoidance, culminating in a landmark $300 million win<\/a> almost a decade ago.<\/p>\n Loading…<\/p>\n Since then, the east coast gas exporters have raised the ire of three prime ministers \u2014 Turnbull, Morrison and Albanese \u2014 over repeatedly raiding domestic supplies to fulfil export contracts.<\/p>\n Soaring local gas prices sent manufacturers either to the wall or offshore, pushed electricity costs into orbit, exacerbated inflation and forced the Reserve Bank to raise interest rates higher than otherwise necessary.<\/p>\n Late last year, after years of intense pressure, the Albanese government committed to a gas reservation policy on the east coast to ensure adequate long-term supplies, similar to Western Australia’s long running scheme.<\/p>\n But the hearing this week has galvanised around an entirely separate proposal; a 25 per cent tax on exports which would override the need for domestic reservation.<\/p>\n Rather than forcing producers to direct a percentage of their gas into the domestic market, a tax on exports would make it more lucrative to simply supply local consumers<\/p>\n “If we have a 25 per cent export tax, we will be at least $17 billion a year better off, we will have more gas supply for Australians and lower gas prices here in Australia,” Australia Institute co-CEO Richard Denniss told the hearing.<\/p>\n PRRT fails to ignite After President Vladimir Putin ordered Russia’s invasion of Ukraine in 2022, Australia’s gas exports peaked. (\u00a0Reuters: Maxim Shipenkov\/Pool)<\/p>\n Gas is one of the nation’s biggest exports, last year pulling in more than $65 billion in national income after peaking at $90 billion in the wake of Russia’s invasion of Ukraine.<\/p>\n But large swathes of the industry are not covered by state royalties while the PRRT \u2014 introduced by Paul Keating as a world leading oil tax \u2014 has been ill-equipped to cope as Australia has shifted from oil production to gas.<\/p>\n Gas projects take far longer to develop than oil and the generous investment write-downs have ensured most gas companies pay little, if any, of the Resource Rent Tax.<\/p>\n (Source: Gas projects Australia Institute, Parliamentary Budget Office)<\/p>\n Gas exports have soared in the past decade, peaking at $90 billion during Russia’s invasion of Ukraine.<\/p>\n But the PRRT has failed to capture any of that growth, consistently raising around $1 billion a year.<\/p>\n Appearing before the inquiry this week, Shell Australia chair Cecile Wake argued the company paid $109m in PRRT last year, That was on revenue of around $2.5 billion.<\/p>\n But another executive, Coralie Trotter, under intense questioning, confirmed the company had paid zero in PRRT in the previous decade.<\/p>\n The key revelation, however, from the pair was that the seven big exporters had all chipped in a million or so dollars each, to finance a massive advertising campaign to fight the changes.<\/p>\n Gas giants prepare for battle Woodside Energy, with its CEO Meg O’Neill, argues that a 25 per cent export tax would make some new projects unfeasible. (ABC News: Keane Bourke)<\/p>\n In the world of energy consultants, they don’t come with reputations any bigger than Wood Mackenzie.<\/p>\n Alarmed, the gas exporters, under the collective banner of Energy Producers Australia, pulled out the big guns a little over a week ago with a report from the esteemed energy experts to fight off the sudden calls for a big new tax.<\/p>\n Not surprisingly, it argues an export tax would undermine government revenue, raise the risk of domestic gas shortages and make the industry uninvestable.<\/p>\n Energy giant Woodside, meanwhile, has warned that the mooted 25 per cent export tax would render its long-anticipated Browse project off the Western Australian coast uneconomic.<\/p>\n But the Wood Mackenzie report, itself, is now under fire.<\/p>\n Rather than model the impact of an export tax on the industry, it has conjured up a hypothetical new gas project and assumes that the PRRT works perfectly, raising huge amounts of tax revenue.<\/p>\n The dream project theoretically pays a whopping 38 per cent of income under the PRRT. It then forks out a further 19 per cent in company tax. That takes the total to 57 per cent.<\/p>\n The Australia Institute’s co-CEO Richard Denniss. (Rob Reibel, ABC News.)<\/p>\n The report then models the impact of a 25 per cent export tax, concluding that Australia would be the worst place on Earth to sink an oil or gas well as a producer would pay 82.6 per cent in tax.<\/p>\n According to The Australia Institute’s Richard Denniss, if the PRRT worked the way Wood Mackenzie has assumed, it would have raised $15 billion for the nation last year, instead of the $1.5 billion it actually gathered.<\/p>\n “No one has ever argued that the PRRT works in practise like it does in theory,” he says.<\/p>\n “In reality, it collects very little revenue. It is the very reason there is an ongoing public debate about the need for tax reform in the gas industry.”Will a tax hit exports? With Australia and Japan forging closer defensive ties, there are concerns that higher gas taxes could negatively impact trade relations.<\/p>\n \u00a0 (Supplied: Department of Defence)<\/p>\n The rising tide of anger within the Australian community has been felt offshore with reports that Japan and other Asian buyers have been concerned that higher taxes could impact contracted purchases.<\/p>\n Japan assures ‘normal supply’ of fuel to Australia<\/a><\/p>\n Fuel will continue to flow from Japan into Australia following recent talks between the two countries. \u00a0<\/p>\n It is a point many in the gas industry have seized upon.<\/p>\n But Denniss dismisses the notion as nonsense, pointing out that the Japanese government makes more money from taxing Australian gas than the Australian government.<\/p>\n “The Japanese can cut their import tax if they’re really concerned about the price of gas,” he told the Senate inquiry.<\/p>\n “To be crystal clear and I’ll end on this point, a gas export tax will not increase the price of gas paid by Japan, increase the price of gas paid by Korea or any of our other customers.<\/p>\n “There’s no Norway premium for Norwegian gas, which is heavily taxed.<\/p>\n “All of the gas is selling at the same world price.”<\/p>\n Gas companies invest where the gas is Norway taxes its natural resources more than any other nation.<\/p>\n \u00a0 (Supplied: Norwegian EV Association)<\/p>\n When it comes to taxing natural resources, Norway leads the field.<\/p>\n It levies a massive 78 per cent effective tax rate against the energy giants, partly through joint ownership of the projects, amongst the highest on the planet.<\/p>\n That has helped it build a $US2.2 trillion sovereign wealth fund that last year delivered a $US350 billion profit, an investment fund that will continue to perform for Norwegians long after their petroleum reserves are depleted.<\/p>\n Ken Henry says the media has to do a better job<\/a><\/p>\n Ken Henry, a former treasury secretary, says the media has to hold Australia’s political system accountable for its policy failures<\/p>\n And still, the oil and gas giants keep coming back for more.<\/p>\n Inpex, the Japanese giant that controls the massive Ichthys LNG project near Darwin along with a host of other Australian gas fields, late last year announced a new venture.<\/p>\n Undeterred by the tax rate, it expanded its Norwegian interests with the purchase of three new fields<\/a> for an undisclosed price.<\/p>\n “We remain dedicated to pursuing further growth through exploration, asset acquisitions and strategic M&A opportunities,” said Koji Ochiai, the managing director of INPEX’s Norwegian offshoot.<\/p>\n Here in Australia, tax is a political hot potato.<\/p>\n It’s 16 years since Ken Henry unveiled his ambitious tax reforms, the centrepiece of which was a resource rent tax, designed to ensure the benefits from the greatest resources boom in history flowed through to the Australian people.<\/p>\n Instead, it became a beacon for political infighting, descending into a rancorous argument that polarised the nation before being dumped by the Abbott government.<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/04\/f46b47050b2f6deb5ffb8e747a17119f.jpeg\")
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