Australia's major LNG exporters are poised to receive a $27 billion revenue boost due to the Middle East conflict, according to new government estimates that are fueling renewed calls for higher gas taxes. Despite being one of the world's three largest LNG exporters, Australia collects relatively little tax compared to other resource-rich nations like Norway and Qatar.
The Albanese government had been under pressure to announce plans to increase taxes on gas exports but shelved the idea after US and Israeli attacks on Iran. The latest quarterly energy and resources report from the Department of Industry, Science and Resources indicates that Iranian missile attacks in March shut down Qatari gas facilities, flipping the global market from oversupply to undersupply and driving world prices higher.
Revenue Forecasts Significantly Upgraded
The department now estimates Australia's LNG export earnings for 2026–27 will be $67.6 billion, $21 billion above the December forecast. Export earnings for the past financial year were also upgraded by $6 billion, and the department warned that extended disruptions could add another $7 billion to LNG exports in 2026–27. The report noted that price pressures linked to the Middle East conflict are expected to ease by 2029, with prices returning to levels consistent with March 2025 forecasts.
Independent Senator David Pocock used the latest forecasts to intensify his demands for higher gas taxes. "Our campaign for a gas tax isn't going away and huge wartime revenue for gas companies again underscores how as Australians we are missing out on a fair return from the sale of our finite resources," Pocock said in a statement. He added that he had booked ads targeting Labor's national conference scheduled for a few weeks, saying, "Time and again we've seen the Albanese government caving to vested interests, from gas to gambling, and it has to stop."
Criticism of Current Tax System
Experts have criticized the current petroleum resource rental tax for failing to capture windfall profits from mostly foreign-owned operators of Queensland's LNG export facilities. Independent economist Chris Richardson described the efforts to tax gas firms as a "bipartisan blooper" and an "epic fail."
Josh Runciman, an analyst at the Institute for Energy Economics and Financial Analysis, noted that Australia is experiencing its second global gas supply crunch in five years. However, unlike in 2022 following Russia's invasion of Ukraine, domestic prices have not followed overseas prices higher, partly due to government intervention including the looming gas reservation scheme. "We know that the existing state and federal taxes don't do a good enough job capturing windfall profits that occur when things happen overseas," Runciman said.
Calls for Tax Reform
While Runciman backed reforms to deliver a better deal for Australians, he said the flat 25% export tax proposed by some, including Pocock, is "not the right model." Instead, he favored an expanded version of Queensland's tiered royalty system at the federal level. "The current higher prices and the revision of export earnings is likely to continue to put pressure on the government to do something about taxes," he said.
Runciman warned that global fossil fuel supplies remain vulnerable to further disruptions, even if the current Middle East conflict is resolved in coming months. "We'll probably see more periods where Australian LNG exporters earn windfall profits again, and without any reform we may see situations like this, where taxpayers continue to not earn much return on the gas."
