Gas Industry Mobilises Against Proposed New Tax as Political Momentum Builds
The gas industry in Australia is vigorously opposing a potential new tax on the sector, arguing it could severely damage relations with key Asian trading partners. This comes as political momentum, including support from within the Labor Party, grows for the government to implement a levy in the May budget to prevent producers from profiting excessively from the Middle East war.
Industry Warns of Diplomatic Fallout
Samantha McCulloch, chief executive of Australian Energy Producers (AEP), has claimed that a new tax would punish the same Asian nations Australia relies on for fuel supplies during the global energy crisis. She emphasised that this could undermine diplomatic ties and economic cooperation.
The gas sector was caught off guard by revelations that the Treasury is modelling options for a new levy to capture windfall profits from gas and thermal coal companies. Potential changes to the Petroleum Resources Rent Tax (PRRT) and corporate tax are also under consideration.
Shifting Public Mood and Political Support
Sources from government, industry, and the opposition indicate that public sentiment on taxing resource giants has shifted significantly. This change provides the Albanese government with political cover to pursue reforms that might have been deemed too risky just months ago.
A campaign led by independent senator David Pocock, social media influencer Konrad Benjamin, and the progressive thinktank the Australia Institute has highlighted the tax contributions of gas companies. This effort has gained traction, with a social media clip of Pocock comparing beer excise returns to the PRRT attracting over 4.2 million views on Facebook.
Growing Backing for a Flat Tax
Labor-aligned trade unions, the Greens, and other cross-benchers are now endorsing a flat 25% tax on gas exports. The Australia Institute estimates this could raise approximately $17 billion annually. The campaign has sparked outrage in the gas industry, leading AEP to place a full-page advertisement in the Daily Telegraph to counter claims that beer excise generates more revenue than the PRRT.
McCulloch accused the gas-tax campaign of spreading misinformation, a criticism supported by shadow resources minister Susan McDonald. However, Pocock defended the comparison, stating it has engaged the public and pressured leaders to act.
Internal Political Divisions and Community Sentiment
Labor backbencher Michelle Ananda-Rajah and former industry minister Ed Husic have publicly backed increasing taxes on gas companies. Liberal frontbencher Andrew Hastie is also open to the idea, revealing a split within the Coalition. Several Labor MPs, speaking anonymously, reported strong community support for an export tax in their electorates, though some expressed concerns about potential impacts on household energy prices.
One MP noted that reform on gas export taxes in the budget is crucial, but warned that Labor must go beyond the current PRRT to be effective. Another highlighted that the issue has been brewing in communities for a long time, with many voters demanding fairer contributions from the industry.
International Concerns and Diplomatic Appeals
McCulloch, whose members include major companies like Woodside, Santos, and Chevron, argued that a new tax could harm Australia's reputation with trading partners such as Japan and South Korea, both major importers of Australian LNG. Japanese ambassador Kazuhiro Suzuki warned that a surprise tax could drive investors to other countries, echoing concerns from the International Energy Agency.
Prime Minister Anthony Albanese has made direct appeals for consistent fuel supplies from other nations, emphasising Australia's role as a reliable supplier in the region. He issued a joint statement with Singapore on energy trade and held calls with regional partners, including Malaysia, South Korea, and Japan, to secure extra fuel amid the crisis.
Albanese stated, "Our gas exports are very important in the region... We expect reciprocation in our economic relations." This underscores the delicate balance between domestic tax policies and international trade relationships as the debate over a new gas tax intensifies.
