The proposed 25% tax on gas exports is gaining momentum within the Australian Labor Party as a way to secure a fair return for the nation's resources. At its national conference, the ALP will vote on a platform change to ensure a fairer return from natural resources through appropriate taxation. This directly aligns with the ACTU's proposal for a 25% tax on liquefied natural gas (LNG) exports.
Why a 25% Tax on Gas Exports Is Needed
Australia is now the world's second-largest LNG exporter, behind only the US and ahead of Qatar. Twenty-five years ago, LNG exports accounted for just 2% of all goods exported; today it's about 12%. Such a massive boom should have delivered soaring tax revenue through the Petroleum Resource Rent Tax (PRRT), established in the 1980s. But the reality is starkly different.
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In 2025-26, Australia exported $52.6 billion more LNG than 25 years earlier—a staggering 1,968% increase. Yet the government raised $979 million less PRRT, a 41% drop. The PRRT system is broken, allowing companies to offset costs and avoid paying their fair share.
| Metric | 25 Years Ago (2000-01) | 2025-26 | Change |
|---|---|---|---|
| LNG Export Value (AUD) | $2.7 billion | $55.3 billion | +1,968% |
| PRRT Revenue | $2.4 billion | $1.42 billion | -41% |
The Inpex Example: No Tax, Billions in Exports
Japanese company Inpex—cited by the Prime Minister as a success of the PRRT—has projects off Western Australia and the Northern Territory. It has paid no royalties, no PRRT, and barely any company tax despite exporting $195 billion worth of LNG. This highlights the fundamental flaw: 56% of LNG exports come from royalty-free offshore gas, and complex accounting lets companies make profits appear ineligible for taxation.
What a 25% Tax Could Pay For
The ACTU estimates a 25% tax on gas exports could raise billions annually. Revenue could fund:
- Healthcare and hospital upgrades across regional and rural areas
- Education investment including teacher salaries and school infrastructure
- Renewable energy transition to reduce reliance on fossil fuels
- Cost-of-living relief for struggling households
- Infrastructure projects like roads, ports, and public transport
Key Takeaways
- The PRRT has failed to capture rising LNG profits—revenue dropped 41% while exports surged nearly 2,000%.
- Offshore gas is largely royalty-free, enabling companies like Inpex to avoid billions in taxes.
- A 25% tax on gas exports would correct this imbalance and deliver a fair return to Australians.
- Labor's internal push signals a major policy shift ahead of the next election.
FAQ
What is the PRRT?
The Petroleum Resource Rent Tax (PRRT) is a tax on profits from oil and gas projects in Australia, introduced in the 1980s to ensure the community shares in the benefits of resource extraction.
Why is the PRRT failing?
The PRRT has complex rules that allow companies to deduct nearly all costs, including interest and exploration expenses, effectively making profits disappear. Offshore gas is also exempt from state royalties, further reducing tax revenue.
How would a 25% tax on gas exports work?
The ACTU proposes a flat 25% tax on the value of LNG exports at the point of shipment, bypassing the loopholes in the PRRT. This would apply to all new and existing projects, raising an estimated $10–15 billion annually.
What could the revenue be spent on?
Revenue could fund public services like healthcare, education, renewable energy, and cost-of-living relief, providing direct benefits to Australian households and communities.
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