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There is mounting pressure on the federal government to reconsider the regulations surrounding Australia’s natural gas exports. However, energy industry leaders caution that introducing a new tax might bring about its own set of complications.
According to fresh analysis by The Australia Institute, imposing a 25 percent tax on gas exports has the potential to boost national revenue by nearly $350 million weekly.
Dr. Richard Denniss, co-chief executive of The Australia Institute, emphasized the urgency of the matter, stating, “The delay in implementing a gas export tax, along with continued reliance on the ineffective PRRT (Petroleum Resource Rent Tax), is costing Australians significantly.”
Research from The Australia Institute indicates that voters from various political backgrounds, including supporters of One Nation and the Greens, largely back the idea of a 25 percent tax on gas exports.
Dr. Denniss further argued that “a well-structured tax on our gas exports could generate $17 billion annually, which would significantly contribute to funding essential services like schools and hospitals in Australia.”
The report estimated that if the Albanese government had implemented an export tax in July 2022, shortly after taking power, it would by now have brought in $68 billion.
Amid the ongoing fuel crisis brought on by the US attacks on Iran and Iran’s subsequent closure of the Strait of Hormuz, other experts say creating a larger gas reserve could keep Australia more resilient to the global shock.
“The move toward renewable sources of electricity, such as solar and wind, which do not depend on global energy markets, is the most important part of this transition,” economics lecturer Dr Scott French from the University of New South Wales said.
“But even powering electric vehicles with energy generated from fossil fuels that are abundant domestically, like coal and natural gas, also increases Australia’s resilience.”
However, energy companies have warned against the idea, saying it will squeeze smaller operators out of the market, reduce investment, and damage regional trade.
“If the ground continues to shift between your feet you move your feet to a different spot,” he said.
And speaking to the same masthead, Beach Energy chief executive Brett Woods said the government’s other proposal to create a larger strategic gas reserve domestically was flawed, though he supported the idea in principle.
Under the proposal, Queensland gas exporters would have to put 25 per cent of their harvest into the domestic market.
“Forcing the domestic producers to have to compete against subsidised LNG volumes materially distorts the market and puts the 66-75 per cent of gas supply at significant risk,” Woods told the AFR.
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