Industry experts have doubled down on the need to change Australia’s natural gas taxation system, following the Albanese government’s decision to avoid reworking it in the 2026-27 budget.
The campaign for a 25 per cent gas export tax, led by independent Senator David Pocock and the Greens, and backed by the Australia Institute, has gained significant traction across the political spectrum, with Prime Minister Anthony Albanese admitting to the Daily Aus the view was “cutting through” with voters.
The government elected to pursue other areas of reform in the budget, including changes to negative gearing and the capital gains tax (CGT) discount, breaking Labor’s 2025 election campaign promise to retain both as they were.
Albanese cited the ongoing Iran war, arguing further taxation of Australia’s gas giants would risk straining relationships with allies during an ongoing energy crisis.
Professor Samantha Hepburn, director of research at the Deakin Law School specialising in mining and energy regulation and policy, blamed pressure from the “extraordinarily influential” domestic gas lobby.
“[They have] deep relationships with both major parties, heavy influence in Queensland and WA, and enormous capacity for coordinated media and advertising campaigns,” she told Central News.
Albanese must not give up on gas tax reform, as the Petroleum Resource Rent Tax does not collect sufficient income, considering Queensland collects more gas royalties than the federal government.
Kevin Morrison, Institute for Energy Economics and Financial Analysis
Kevin Morrison, an energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), said pressure from the gas lobby had hampered the government’s readiness to implement changes to the system.
“The Labor party has suffered electorally [at] the hands of the resources sector, both from miners and the oil and gas sector over previous tax battles over the Resource Super Profits Tax (RSPT) and the Mineral Resource Rent Tax (MRRT),” he added.
“So, they were reluctant to engage in a battle when forming a government for the first time in nine years.”
Amid news in April that the government had ruled out the tax for the upcoming budget, Senator Pocock and the Australian Institute ramped up the campaign, highlighting a figure exceeding $70 billion in lost revenue had the government instated the tax at the beginning of their tenure in 2022.
Morrison said gas lobby pressure meant implementing such reforms would not have been possible for the incoming Labor government, adding: “I can’t see politically that the government could have brought in a 25 per cent gas tax when it was elected.
Voter support for gas tax in April. Data via The Australia Institute
“However, Albanese must not give up on gas tax reform, as the Petroleum Resource Rent Tax (PRRT) does not collect sufficient income, considering Queensland collects more gas royalties than the federal government does from gas and oil companies through the PRRT, even though Queensland produces about 30 per cent of gas used for LNG exports compared with the 70 per cent produced in federal waters under the PRRT.”
Conversely, Hepburn claimed such reform was politically and economically realistic at points during the Albanese government’s term, although it would have cost “significant political capital”.
Analysing the period from 2022-2024, Hepburn identified several conditions which favoured the introduction of the tax, including “a surge in global LNG prices after Russia’s invasion of Ukraine, extraordinary profits for gas exporters, and a sharp shift in public sentiment toward getting more from our own gas”.
“Treasury and government budget papers conceded the PRRT system was underperforming,” she said.
“Labor itself amended the PRRT in 2023 because its framework had become politically indefensible… The political conditions were unusually favourable compared with previous decades.”
Pocock, the Greens and the Australia Institute have continued to rally for a 25 per cent gas tax after the budget was announced on Tuesday night.
Main image Aron Razif/Pexels.
