- The Guardian
- Issue #2186
Photo: needpix.com
If you drink beer, congratulations, you’re the backbone of the Australian economy! After all, that’s how politicians and the media describe the gas industry. The federal government collects more money from the beer excise than from the Petroleum Resource Rent Tax, as Independent ACT Senator David Pocock pointed out in Parliament, in an exchange that went viral.
When Prime Minister Anthony Albanese was asked why Australian beer drinkers pay more tax than gas export companies, the PM dodged the issue by accusing Senator Pocock of “promot[ing] grievance.”
If, like most Australians, you think Australia shouldn’t be giving away its gas for free, or that the gas industry should contribute more from its super profits tax than the beer excise, the Prime Minister seems to think you should stop whingeing about it. The real question is – why isn’t the Prime Minister aggrieved by this gas rip-off?
Australia has a gas export problem. Gas exports have led to the tripling of wholesale east coast gas prices and doubling of electricity prices, since exports began in 2015. The gas export industry doesn’t even pay royalties on more than half of those exports, according to Australia Institute research. In just four years, multinational companies made $149 billion exporting gas from Australia royalty-free.
It is obscene that Australia raises so little money from gas exports, despite being one of the largest producers on the planet. Around 80 per cent of the gas we produce is used for export. It can only be dug up and sold once. We should be raking in the revenue from our gas exports, like Norway does.
Nobel Laureate and economist Professor Joseph Stiglitz urged the Australian government to “follow the money” and start imposing “a very, very high tax rate” on the country’s natural resources. “Get the highest value from whoever can extract your resources,” Professor Stiglitz said.
That’s exactly what the Australian Council of Trade Unions (ACTU) is proposing to fix this problem, a 25 per cent tax on gas exports, which could raise an estimated $17 billion a year in revenue. Polling shows Australians from across the political spectrum support the ACTU’s 25 per cent gas export tax. It’s hard to find public policies that can attract that kind of across-the-board support from the public.
Last week, Independent Senator David Pocock threw his support behind a 25 per cent gas export tax, joining Australian Greens Leader Larissa Waters, who publicly supported the policy in her address at the Australia Institute’s Revenue Summit in Canberra last year.
Instead, Albanese’s plan is essentially to continue giving Australia’s gas away for free. Is that a grievance? Yes. But it’s also just a fact. It’s right there in the government’s own budget papers in 2023: “To date, not a single LNG project has paid any PRRT and many are not expected to pay significant amounts of PRRT until the 2030s.”
No company better illustrates the great gas rip-off better than Japanese gas company INPEX. Each year, INPEX exports more gas each year than is used in New South Wales, Victoria, and South Australia combined. It sells no gas to Australians, outside of emergencies. It pays no royalties, no Petroleum Resource Rent Tax (PRRT) and paid no corporate tax on $21 billion in gas exports between 2015 and 2025. I guess it’s not hard to make money when Australia effectively gives you its gas for free.
You could argue that Japan is better at extracting value from Australia’s gas exports than we are. Japan is on-selling the Australian gas it imports for domestic use, according to new analysis from (IEEFA). It found that Japanese companies resold between AUD$11-14 billion worth of Australian LNG in 2024, with profits likely exceeding AUD$1 billion-or roughly the same as Australia collects from the Petroleum Resource Rent Tax.
Australia is a low-tax country and it has a revenue problem. Australians often hear that we “can’t afford” to do this or that in the Budget. If we collected just the OECD average in tax each year, the Treasurer would have an extra $140bn or so in revenue. A 25 per cent tax on gas exports would raise revenue from those who can most afford it that the government could invest in those who most need it. It would raise enough revenue for the government to offer targeted tax breaks for low-income earners who are struggling to make ends meet. Or, it could generate revenue for things Australians desperately need like public housing, health care, education and universal childcare. All while cutting into the profits of fossil fuel polluters.
