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 global energy price surges caused 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. Estimates suggest the tax could generate $17 billion annually, with critics like the Australian Energy Producers warning it would deter investment and worsen energy security. The government has not ruled out the tax but faces opposition from the Coalition and industry groups, who argue higher taxes would freeze investment and increase costs for consumers. The UKâs experience with a similar windfall tax has been cited as a potential model, though the Australian government has previously resisted such measures. The debate centers on balancing revenue for struggling households against the need for continued gas investment amid global supply disruptions.
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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 Israelâs and Iranâs 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 governmentâs agenda (ABC, Guardian).
Points of Difference
Details reported by only one source:
- The Guardian reported that the prime ministerâs 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 included a quote from Pocock stating, 'Australians are already paying more on petrol and we shouldnât be paying more on beer excise than the government gets for petroleum resource rent tax,' comparing excise revenues ($5.45bn for tobacco, $3.4bn for spirits, $2.7bn for beer) to the $1.5bn expected from PRRT.
- The Guardian mentioned that the escalation in attacks since the Israel-US war against Iran began in February sent shockwaves through the global energy market, with Iran retaliating by attacking Qatarâs Ras Laffan gas hub, which reportedly damaged facilities producing 17% of QatarEnergyâs LNG export capacity.
- 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 noted that the Coalition, One Nation, and gas exporters voted down a Greens amendment calling for a levy on gas companies' windfall profits in the Senate last week.
- The ABC included a quote from Shell Australiaâs Cecile Wake warning that imposing a levy on LNG exports would 'undermine investment and erode energy security,' and that domestic gas prices remain 'materially below international pricing.'
- The ABC reported that the Australia Institute estimated Australia would have received around $17 billion annually in tax revenue from gas producers since 2022 if a 25% tax on gas exports had been in place, based on pre-Iran war levels.
- The ABC mentioned that the ACTU called for a 25% export levy on windfall profits to give 'working people a fair stake,' and that the federal government made changes to the PRRT in 2023 but it generated much less than predicted.
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 PRRT reforms ahead of the May budget.
- The Guardian quotes Resources Minister Madeleine King as saying a 25% levy would 'discourage investment in new gas supply,' but the ABC does not include this specific quote and focuses more on the governmentâs internal modelling process.
- The Guardian highlights Pocockâs criticism that the government is 'caving to pressure' from crossbenchers, while the ABC frames the governmentâs actions as a response to 'growing calls' from crossbenchers, unions, and economists without implying capitulation.
- The Guardian mentions that the tobacco excise is forecast to bring in $5.45 billion in 2025-26, while the ABC does not provide this specific comparison between excise revenues and PRRT.
- The Guardian reports that the Australia Institute estimated Australia would have received around $17 billion annually in tax revenue from gas producers since 2022 if a 25% tax had been in place, but the ABC states this estimate is for the current situation post-Iran war, not pre-war levels.
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