Australia's liquefied natural gas (LNG) exporters are set to receive a $27bn revenue boost due to the Middle East conflict, reigniting calls for higher gas taxes. Independent senator David Pocock has seized on the new government estimates to push for reform, stating that Australians are 'missing out on a fair return' from the sale of finite resources.
New Estimates Show Massive Windfall
The Department of Industry, Science and Resources released its latest quarterly energy and resources report, which projects Australia's LNG export earnings for 2026–27 at $67.6bn—$21bn higher than December forecasts. Additionally, the department upgraded its export earnings estimates for the past financial year by $6bn and warned that extended disruptions could add a further $7bn to LNG exports in 2026-27.
The report attributes the price surge to Iranian missile attacks in March, which shuttered Qatari gas facilities and 'flipped' the global market from oversupply to undersupply. 'Price pressures linked to the Middle East conflict are expected to largely ease by 2029,' the report noted.
Pocock Demands Action
David Pocock, the independent senator for the Australian Capital Territory, used the forecasts to intensify his campaign for a gas tax. '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 also announced plans to book ads targeting Labor's national conference, criticizing the Albanese government for 'caving to vested interests, from gas to gambling.'
Experts Criticize Current Tax System
Australia, despite being one of the world's three largest LNG exporters, collects relatively little tax compared to resource-rich nations like Norway and Qatar. The current petroleum resource rental tax has failed to capture windfall profits from mostly foreign-owned operators of Queensland's LNG export facilities. Independent economist Chris Richardson described the tax system 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 and the looming gas reservation scheme. Runciman supported reforms but argued that 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.
Future Vulnerabilities
Runciman warned that global fossil fuel supplies remain vulnerable to disruptions, even if the current Middle East conflict is resolved. '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,' he said. The revised export earnings estimates are likely to keep pressure on the government to address gas taxation.
