On Thursday, at its national conference the ALP will vote to change its platform to include a pledge to deliver a fair return on Australia’s natural resources.
The proposal is that the platform includes the lines:
“Labor will ensure that the Australian people receive a fairer return from their natural resources including through appropriate taxation arrangements, while securing Australia’s role as a reliable international energy supplier and investment partner.”
The language is a bit “all things to all people”, but it clearly relates to better taxing gas – essentially to implement the ACTU’s proposal of a 25% tax on gas exports.
Right now, Australia is the second biggest exporter of LNG in the world, behind only the US and ahead of Qatar. Twenty-five years ago, LNG exports accounted for just 2% of all goods exported from Australia; now it’s about 12%.
Such a boom should deliver a similar soaring of tax revenue via the petroleum resource rent tax (PRRT), which was set up in the 1980s to tax oil and gas profits.
But no. In 2025-26, Australia exported $52.6bn more LNG than 25 years earlier (a lazy 1,968% increase), but the government raised $979m less PRRT (a 41% drop):
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We haven’t even had a decent increase from royalties in the same way we did from the iron ore boom, because 56% of LNG exports come from royalty-free gas – because it is offshore.
Take the Japanese company Inpex – a company the prime minister cited as an example of how the PRRT is working. It has projects off the Western Australia and Northern Territory coast. It has paid no royalties and no PRRT and barely any company tax despite boasting that it has exported $195bn worth of LNG:
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The problem is the PRRT is complex. It taxes natural gas, not the LNG exports, and it also allows companies to offset vast costs through accounting methods that could in effect make an LNG profit never eligible to pay PRRT.
Nearly a decade ago, then treasurer Scott Morrison commissioned a review into the PRRT (the Callaghan review). The review recommended a few minor changes, which Morrison didn’t bother to make.
In 2023, Treasurer Jim Chalmers commissioned another review.
It recommended three changes. The least favoured choice by Treasury was a 90% cap on the proportion of PRRT-assessable income that can be offset. It was the most favoured by the gas industry, and that was the one that was implemented.
Gas companies, you see, are very good at lobbying.
The government could not admit this would raise more tax; instead, the phrase became “more tax sooner”. The changes meant gas companies would have to pay tax earlier than they otherwise could have been able to put off.
And yet the estimated revenue from the PRRT keeps getting revised down.
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This year the Greens, supported by independent senator David Pocock, conducted another review into the tax of gas (I co-wrote a submission). The impetus came from the proposal by the ACTU (for which I assisted with research) to ditch the PRRT and instead put a 25% tax on gas exports.
This was estimated to raise up to $17bn a year – rather more than the $1.3bn average that has been raised over the past decade by the PRRT.
The gas industry lobby fired up.
They said this would be folly, because the boom in PRRT revenue was coming. Yes, the gas industry seriously tried to sell us that keeping the PRRT was better because it would pay more tax.
Anthony Albanese repeated their spin, telling reporters that “the PRRT is designed to ramp up how much revenue it creates”.
One gas industry analyst told The Australian in April that “around the end of this decade … we’re going to get a huge influx of PRRT”.
Four weeks later, the May budget released the first estimates for PRRT revenue in 2029-30 (i.e. the end of the decade). It was just $1.25bn – the lowest amount in six years.
As a percentage of GDP and as a share of total tax raised, it would be the lowest in 40 years:
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By the end of the decade, PRRT will raise less revenue than excises on wine, beer, spirits, other alcoholic beverages and tobacco, the major bank levy and visa application charges:
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The reality is the gas industry won the PRRT fight. All reforms and fixes result in the gas industry paying less.
That is a pathetic state of affairs. Embarrassing for all or us, let alone the treasurer or prime minister overseeing it.
A 25% tax on gas exports is clean – it does not affect the price paid by customers; it just affects the after-tax profits of the gas companies. It creates an incentive for producers to sell gas to Australia at a lower price (to avoid paying the tax).
And it would raise $17bn a year.
How much is that?
More than enough to fully pay for dental in Medicare, or free childcare, or to double spending on public schools:
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In 2029-30 the national disability insurance scheme is being cut by $16.4bn because the government instead chose not to upset the gas industry.
The “more sooner” and Albanese “ramping up” lines have rung so hollow that ALP members are clearly unimpressed and are pushing for a commitment to properly tax gas.
It would be foolish to think the platform change will automatically change government policy, but it signals that the fight to get a fair return for our resources continues. The pressure isn’t just coming from the Greens or independents, but now from inside the party.
• Greg Jericho is a Guardian columnist and chief economist at the Australia Institute
