Gas tax: Federal Government set to shelve plans for supersized gas tax amid current global energy crisis

The Federal Government will knock back calls for a supersized gas tax that it believes would alienate trading partners at a time of heightened global energy volatility.

Australia’s oil and gas majors have spent the past week arguing before a Greens-led parliamentary inquiry that a windfall gas export tax of 25 per cent would stifle investment, particularly when there were already concerns about future supplies on the east coast.

Shell’s country chair Cecile Wake on Wednesday called such a proposal “spectacularly ill-advised” and said it would make prospective investors view Australia as having “significantly higher sovereign risk”.

Executives from Woodside, Chevron and Inpex are appearing at the inquiry on Friday.

The arguments appear to have further strengthened the Government’s resolve against including the tax in next month’s Budget.

Prime Minister Anthony Albanese echoed the industry’s position in several interviews on Thursday, pointing out that the sector paid $22 billion in company tax last year.

“I’ve seen there are reports suggesting that there’s more on beer tax than gas. It’s just not true,” he said.

Trade Minister Don Farrell said the Prime Minister and Treasurer Jim Chalmers had been “pretty clear” about the government’s position.

“We’re not changing our policies in respect to gas,” he said.

The Government is concerned that the US and Israel’s attack on Iran and the resultant global fuel crisis made it too difficult an environment to introduce new taxes on energy.

It also risked irritating countries that invest heavily in Australia’s oil and gas sector — the same countries the Government had been calling on to supply more petrol and diesel before local stores run dry.

“The most important thing that Australia can do and the Australian Government can do is to ensure the conditions are there for the continued export of our gas,” Senator Farrell said.

“One of the discussions that we had in Singapore last week was very much on this point. It’s interesting that the petrol that we purchase from Singapore is produced by Australian gas that we supply into the Singaporean facilities.

“Australia has an obligation, an agreement, to supply this gas. And in the time that this government has been running Australia, we have not failed to deliver on one kilojoule of gas into the region.”

Government sources confirmed to The West that while there would be movement on tax in the budget, the proposal for further imposts on gas wasn’t part of what was being worked up.

Polling and political research by multiple companies has picked up the groundswell of support for taxing gas exports, building on the campaign by the Greens, independent senator David Pocock, social media influencers, and think tanks like The Australia Institute.

Support was widespread across party lines, with even a third of One Nation backers in favour of the idea, one pollster said.

Several Labor sources said the building public support meant that while the timing wasn’t right now to be levying new taxes on gas exports, it was inevitable it would come back onto the agenda down the track.

Resources Minister Madeleine King told ABC radio on Friday morning that she would not pre-empt any decisions ahead of the Budget but there was no change in the Government’s position and her current focus was on ensuring continuity of local fuel supplies.

But she noted the enormous foreign capital required to develop oil and gas projects and the communities they support.

She also took a swipe at the inquiry.

“It’s only in the universe of the Green Party and their friends that they can say that spending hundreds of billions of dollars across the country could be considered in any way free,” Ms King said.

“It’s clearly an absurd proposition, and to be frank I’m mystified by how they get away with such tosh.”

Senator Pocock said he was “appalled but not surprised to see the Albanese Government caving to gas companies” by shelving tax plans.

“Politicians, including major party politicians, have been elected to represent their communities and should be putting them ahead of multinational gas companies,” he said.

“This just makes me more determined to go harder on our campaign to get a 25 per cent tax on gas export revenue.”

He’s crowdfunded more than $105,000 to buy space on billboards in marginal seats around the country and in Dr Chalmers’ electorate promoting the campaign.

Business groups say heavier taxes on oil and gas producers would scupper new projects, reduce Australia’s relevance and expose it to “a more dangerous world” as modelling shows a $US11 billion jump in Petroleum Resource Rent Tax collections.

Ahead of the Greens-led committee holding a third day of hearings in Perth on Friday, lobby group Australian Energy Producers said the industry was already the nation’s second-largest corporate taxpayer.

They pointed to a new analysis by energy research firm Wood Mackenzie, which found the PRRT would collect $US24.5 billion between 2026 and 2030 at a Brent oil price of $US100 a barrel, where it currently hovers.

That compares to $US13.5b at $US70/b, where it had been before the Middle East conflict erupted on February 28.