Pressure is mounting inside the Australian Labor Party to impose a 25% tax on gas exports, a move that could generate up to $17bn per year, according to a proposal by the Australian Council of Trade Unions (ACTU). The push comes ahead of the ALP national conference on Thursday, where the party will vote on changing its platform to include a commitment to deliver a fairer return from Australia’s natural resources.
Proposed Platform Change
The proposed platform 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.” While the wording is broad, it is widely interpreted as a move to better tax gas exports, effectively implementing the ACTU’s proposal of a 25% levy on LNG exports.
Current Tax System Falls Short
Australia is the world’s second-largest exporter of liquefied natural gas (LNG), behind only the US and ahead of Qatar. Twenty-five years ago, LNG exports accounted for just 2% of all goods exported; today, they represent about 12%. Despite this boom, the petroleum resource rent tax (PRRT), designed in the 1980s to tax oil and gas profits, has failed to deliver corresponding revenue. In 2025-26, Australia exported $52.6bn more LNG than 25 years ago—a 1,968% increase—but PRRT revenue dropped by $979m, a 41% decline.
Royalties have also not kept pace, as 56% of LNG exports come from offshore, royalty-free gas. For instance, the Japanese company Inpex, which Prime Minister Anthony Albanese cited as an example of the PRRT working, has projects off the Western Australia and Northern Territory coast. Despite exporting $195bn worth of LNG, Inpex has paid no royalties, no PRRT, and barely any company tax.
Flawed PRRT Structure
The PRRT is complex, taxing natural gas rather than LNG exports, and allows companies to offset vast costs through accounting methods that can effectively make LNG profits ineligible for the tax. A 2017 review by then-treasurer Scott Morrison recommended minor changes that were never implemented. In 2023, Treasurer Jim Chalmers commissioned another review, which proposed three changes. The least favored by Treasury—a 90% cap on the proportion of PRRT-assessable income that can be offset—was the most favored by the gas industry and ultimately adopted.
Despite claims that the changes would deliver “more tax sooner,” estimated PRRT revenue continues to be revised downward. The May budget projected PRRT revenue for 2029-30 at just $1.25bn, the lowest in six years and, as a percentage of GDP and total tax raised, the lowest in 40 years. By the end of the decade, PRRT is expected to raise less revenue than excises on alcohol and tobacco, the major bank levy, and visa application charges.
Benefits of a 25% Export Tax
The ACTU’s proposed 25% tax on gas exports would raise an estimated $17bn annually—far more than the $1.3bn average raised by the PRRT over the past decade. Greg Jericho, a Guardian columnist and chief economist at the Australia Institute, notes that such a tax is clean: it does not affect consumer prices, only after-tax profits of gas companies, and creates an incentive for producers to sell gas domestically at lower prices to avoid the levy.
The $17bn raised could fully fund dental care under Medicare, free childcare, or double spending on public schools. In contrast, the government plans to cut the National Disability Insurance Scheme by $16.4bn in 2029-30, partly to avoid upsetting the gas industry.
Internal and External Pressure
Prime Minister Albanese has defended the PRRT, repeating industry spin that it will “ramp up” revenue. However, budget estimates contradict this. The Greens and independent senator David Pocock have conducted their own review into gas taxation, supporting the ACTU’s proposal. Jericho argues that the platform change signals that the fight for a fair return on resources continues, with pressure now coming from within the party, not just from outside.
