Australian government considering a 25% windfall tax on gas exports amid global energy crisis
Consensus Summary
Australian politicians are debating whether to impose a 25% windfall tax on gas exports to capture billions in profits from the global energy crisis triggered by the Middle East conflict. The Department of Prime Minister and Cabinet has asked Treasury to model the tax and reforms to the Petroleum Resources Rent Tax, with crossbenchers like David Pocock and Greens leader Larissa Waters leading the push. The Australia Institute estimates the tax could generate $17 billion annually, while gas companies warn it would deter investment and worsen energy security. The UKās 25% windfall tax serves as a model, but the Australian government has so far resisted such measures, with Resources Minister Madeleine King arguing it would hinder net-zero transition plans. While the ABC reports the PM&C is exploring options cautiously, the Guardian frames the government as potentially yielding to political pressure. Contradictions exist over the timing of policy shifts, with the Guardian emphasizing resistance while the ABC highlights active modelling efforts.
ā Verified by 2+ sources
Key details reported by multiple sources:
- The Department of Prime Minister and Cabinet (PM&C) requested Treasury to model options for a new 25% levy on gas exports and reforms to the Petroleum Resources Rent Tax (PRRT) ahead of the May budget, as reported by ABC and Guardian.
- Crossbench MP David Pocock and Greens leader Larissa Waters have both called for a flat 25% tax on gas exports, with Pocock stating Australians are being 'fleeced' by gas companies under the current PRRT scheme (ABC, Guardian).
- The Australia Institute estimated a 25% export levy on gas would generate approximately $17 billion annually in tax revenue (ABC, Guardian).
- The Middle East conflict, including Israelās and Iranās attacks on Gulf gas fields (South Pars and Ras Laffan) in February and April 2024, has driven up global gas prices and increased Australian gas exporters' profits (ABC, Guardian).
- The Petroleum Resources Rent Tax (PRRT) is currently expected to raise $1.5 billion in 2025-26, according to the mid-year economic and financial outlook (Guardian).
- Australian Energy Producers (AEP) CEO Samantha McCulloch warned that a 25% levy on gas exports would discourage investment, leading to gas shortfalls and higher energy prices (ABC, Guardian).
- The UK introduced a 25% windfall tax on gas profits in 2022, which has since been extended and increased (ABC).
- The Australian gas industry paid $21.9 billion in total taxes and royalties in 2024-25 (ABC).
- The federal government has released over 500 million litres of petrol and diesel from federal reserves to regional communities (ABC).
- Energy Minister Chris Bowen did not rule out considering a windfall tax on gas revenue or PRRT changes, stating tax reform is on the governmentās agenda (ABC, Guardian).
Points of Difference
Details reported by only one source:
- The Guardian reported that the prime ministerās department asked Treasury to model a flat 25% tax on gas exports specifically in response to crossbenchers like David Pocock pressuring the government to redirect 'wartime profits' to struggling Australians.
- The Guardian quoted Pocock saying, 'Australians are already paying more on petrol and we shouldnāt be paying more on beer excise than the government gets for petroleum resource rent tax,' comparing excise revenue ($5.45bn for tobacco, $3.4bn for spirits, $2.7bn for beer) to the $1.5bn expected from PRRT.
- The Guardian noted that Resources Minister Madeleine King previously stated that steeper taxes on gas would discourage investment in new supply needed for Australiaās net-zero transition, while Energy Minister Chris Bowenās comments were framed as 'not ruling out' the consideration but deferring to the treasurer.
- The ABC reported that the PM&C document explicitly stated, 'Energy producers should not benefit from high international prices at the expense of domestic customers,' and suggested Treasurer Jim Chalmers could publicly announce the tax intention ahead of the May budget.
- The ABC highlighted that the Coalition, One Nation, and gas exporters voted down a Greens amendment calling for a levy on gas windfall profits in the Senate last week, despite the PM&Cās request for modelling.
- The ABC included a quote from the Australia Institute estimating Australia would have received around $17 billion annually in tax revenue from gas producers since 2022 if a 25% tax had been in place, based on pre-Iran war levels.
- The ABC noted that the Australia Institute estimated gas companies accrued about $100 billion in windfall profits during Russiaās invasion of Ukraine, with early indications suggesting Middle East crisis earnings would be 'many multitudes' more.
- The ABC reported that the ACTU called for a 25% export levy on windfall profits to give 'working people a fair stake,' and that the request to Treasury did not specify the size of the levy but referenced the UKās 25% windfall tax.
Contradictions
Conflicting information between sources:
- The Guardian states the government has 'so far resisted any push for steeper taxes against the industry,' while the ABC reports the PM&C is actively seeking Treasury modelling for a new levy and suggests Chalmers may announce the intention ahead of the budget.
- The Guardian quotes Resources Minister Madeleine King as saying steeper gas taxes would discourage investment in new supply, but the ABC does not include this specific quote and instead focuses on Bowen deferring to Chalmers without ruling out the tax outright.
- The Guardian highlights Pocockās criticism that the government is 'caving to pressure' from crossbenchers, while the ABC frames the PM&Cās request for modelling as a cautious, behind-the-scenes exploration of options rather than a definitive policy shift.
- The Guardian mentions the tobacco excise ($5.45bn), spirits ($3.4bn), and beer ($2.7bn) excises as comparisons to PRRT revenue, but the ABC does not include these specific excise figures in its reporting.
- The Guardian reports that the Australia Institute estimated Australia would have received $17bn annually in gas tax revenue since 2022 if a 25% tax had been in place, while the ABC states this estimate is for the current year only (2025-26) and based on pre-Iran war levels.
Source Articles
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