Former Treasury secretary Ken Henry has urged the Albanese government to ignore 'self-serving' claims from gas giants and implement a 100% windfall profits tax. In a submission to a parliamentary inquiry, Henry argued that such a tax is 'socially optimal' and would not deter investment, as any project meeting its cost of capital would still do so under the tax.
Henry, author of the 2010 review that recommended a 40% mining super profits tax, said the justification for such a tax remains 16 years on. He suggested revenue from the windfall tax could fund a sovereign wealth fund, nature repair, and tax reform. The submission comes as the government faces pressure from unions and crossbenchers to introduce a 25% tax on gas exports, which the Australia Institute estimates could raise £17bn annually.
The government is weighing options ahead of the 12 May budget, with Treasury modelling a windfall profits tax and changes to the petroleum resource rent tax. However, appetite for intervention has diminished amid the global energy crisis sparked by the Iran war, with Prime Minister Anthony Albanese prioritising energy supply.
Oil and gas companies, including Chevron, BP, ConocoPhillips, and Shell, have defended the existing regime in submissions, warning that changes would threaten investment. BP argued that new taxes could render projects uneconomic, leading to reduced production or early shutdowns. The inquiry will hold public hearings next week and report on 7 May, five days before the budget.
