Pressure is growing inside Labor to properly tax gas exports, with a platform change to be voted on at the party's national conference on Thursday. The proposal includes a pledge to deliver a fair return on Australia's natural resources through appropriate taxation arrangements.
The Australian Manufacturing Workers' Union has described the tax system as 'rigged' in a bold manifesto ahead of the conference. The proposal language states: 'Labor will ensure that the Australian people receive a fairer return from their natural resources including through appropriate taxation arrangements, while securing Australia's role as a reliable international energy supplier and investment partner.'
A 25% tax on gas exports could raise $17bn a year
Australia is the second biggest exporter of LNG in the world, behind only the US and ahead of Qatar. Twenty-five years ago, LNG exports accounted for just 2% of all goods exported; now it's about 12%. Despite this boom, tax revenue via the petroleum resource rent tax (PRRT) has not soared. In 2025-26, Australia exported $52.6bn more LNG than 25 years earlier (a 1,968% increase), but the government raised $979m less PRRT (a 41% drop).
Fifty-six per cent of LNG exports come from royalty-free gas because it is offshore. The Japanese company Inpex, cited by the prime minister as an example of how the PRRT is working, has projects off the Western Australia and Northern Territory coast. It has paid no royalties, no PRRT, and barely any company tax despite exporting $195bn worth of LNG.
PRRT reforms have failed to raise significant revenue
The PRRT is complex, taxing natural gas rather than LNG exports, and allowing companies to offset vast costs through accounting methods that can make an LNG profit never eligible to pay PRRT. In 2023, Treasurer Jim Chalmers commissioned a review that recommended three changes. The least favoured by Treasury—a 90% cap on the proportion of PRRT-assessable income that can be offset—was the most favoured by the gas industry and was implemented.
The estimated revenue from the PRRT keeps being revised down. By the end of the decade, PRRT will raise less revenue than excises on wine, beer, spirits, other alcoholic beverages and tobacco, the major bank levy, and visa application charges. In May, the budget released first estimates for PRRT revenue in 2029-30 at just $1.25bn—the lowest amount in six years, and as a percentage of GDP and share of total tax, the lowest in 40 years.
A clean tax that would fund dental, childcare, or schools
The ACTU's proposal to ditch the PRRT and instead put a 25% tax on gas exports was estimated to raise up to $17bn a year, compared to the $1.3bn average raised over the past decade by the PRRT. The gas industry lobbied against it, and Prime Minister Anthony Albanese repeated their spin, telling reporters that 'the PRRT is designed to ramp up how much revenue it creates.' One gas industry analyst told The Australian in April that 'around the end of this decade … we're going to get a huge influx of PRRT.' Four weeks later, the budget showed PRRT revenue in 2029-30 at just $1.25bn.
A 25% tax on gas exports is clean—it does not affect the price paid by customers, only the after-tax profits of gas companies. It creates an incentive for producers to sell gas to Australia at a lower price. The $17bn a year would be more than enough to fully pay for dental in Medicare, or free childcare, or to double spending on public schools. In 2029-30, the National Disability Insurance Scheme is being cut by $16.4bn because the government chose not to upset the gas industry.
Fight for fair return continues
Greg Jericho, a Guardian columnist and chief economist at the Australia Institute, wrote: 'Anthony Albanese's lines have wrung so hollow that ALP members are clearly unimpressed and are pushing for a commitment to properly tax gas.' The platform change signals that the fight to get a fair return for resources continues, with pressure coming not just from the Greens or independents, but from inside the party.
