Australia’s resources sector raises alarm bells at reports that the PM’s department exploring gas tax options

Australia’s resources sector is alarmed at reports the Prime Minister’s department is quietly exploring options for a new gas export levy and further reforms to the Petroleum Resource Rent Tax.

The proposals would capture “windfall profits” from Australian gas giants who are profiting off the global supply crunch prompted by the suspension of Middle East gas shipments due to the US-Israel-Iran war.

“Energy producers should not benefit from high international prices at the expense of domestic customers,” a leaked document published by the ABC stated.

A windfall tax on exported gas profits has long been called for by unions, economists, Greens and crossbenchers but has been vehemently opposed by the sector.

Chamber of Minerals and Energy WA chief executive Aaron Morey described the reports as “deeply concerning” and reminded Australians the oil and gas industry paid a record $21.9 billion in taxes and royalties in FY25.

He said it was the country’s second biggest taxpayer after mining and any talk of a tax could pose a “dangerous risk to Australian living standards and energy security”.

“Australia is currently being shielded from global gas shocks because we’ve attracted long-term investment into supply,” Mr Morey said.

“Increasing or introducing new taxes would scare that investment away — and leave families and businesses facing much higher bills for their gas and electricity.

“At exactly the moment we need more gas, not less, this would dramatically escalate sovereign risk. To address this, the Government should immediately rule out any changes.”

The reports come just weeks out from the Federal Budget in May, which is a common time for the government exploring various revenue-raising ideas and modelling a range of fiscal scenarios.

Australian Energy Producers chief executive Samantha McCulloch was also highly critical of any new gas tax.

She said imposing “even higher taxes” on Australia’s gas industry would leave Australia “more exposed to future energy shocks”.

“This would be the worst possible time for Australia’s economy and energy security to impose a new, retrospective tax on an essential energy sector,” Ms McCulloch said.

“The current surging petrol and diesel prices in Australia underscore just how important it is that we ensure Australia remains able to meet its own gas needs through secure domestic supply.

“While international gas prices have surged, Australian gas prices remain relatively low, and the market is well-supplied. We should not take this for granted.”

As we navigate the current global energy crisis, the Government should be working with the gas industry on how to ensure Australians continue to have reliable and affordable gas supply, and remain resilient to future shocks.”

Energy Minister Chris Bowen said that “tax reform is on the government’s agenda,” but didn’t officially confirm which specific options will be included in the May Budget.

“The Budget is delivered in May and not March. You would expect the Treasurer and the treasury with his Senior Ministerial colleagues to be working through potential options. I won’t be commenting on Cabinet processes,” he told reporters in Brisbane on Friday.

“The budget will be delivered by the Treasurer, not by the energy minister.”

Australia’s Climate Council said the energy shock prompted by the Middle East conflict should be a wake up call to the Albanese Government to act on Australia’s transition.

“The Climate Council welcomes reports that the Prime Minister is considering proposals for a tax on gas exports, which would help ensure multinational gas corporations pay their fair share for the public resources they are profiting from,” Climate Councillor Greg Bourne said.

“This should be part of a broader effort to permanently secure Australia’s energy independence and a safer future by getting off fossil fuels entirely.

“True energy security comes from power sources that no foreign conflict can disrupt, abundant clean power like solar and wind, backed by storage like big batteries.”

Allegra Spender and David Pocock have been among independents to call for changes to the existing PRRT scheme, while Greens leader Larissa Waters on Thursday wrote to the PM offering support for an export levy when Parliament returns next week.

The Government has insisted that Australia’s energy supplies are secure and that all contracted shipments had continued to arrive since the war kicked off on February 28, impacting the Strait of Hormuz which controls the passage of more than 20 per cent of the world’s oil.