With the Prime Minister considering a 25% tax on gas exports, the gas cartel has quickly launched a counter campaign. Rex Patrick calls out an industry crying “wolf”.
UK windfall tax
In 2022 when Russia invaded Ukraine in 2022, already rising oil and gas prices soared. That lead to bumper profits for energy companies, which led to calls for a windfall tax in the UK.
After all, why should energy companies make super profits from the tragedy of war, from oil and gas that doesn’t belong to them.
The British industry body, Offshore Energies UK (OEUK), came out quickly and strongly warning the windfall tax will sharply reduce investment in the sector, putting thousands of jobs at risk.
An Energy Profits Levy was swiftly introduced by then Chancellor of the Exchequer, Rishi Sunak. It was initially set at 25% and was due to expire at the end of 2025. In January 2023 the then Chancellor Jeremy Hunt increased the levy to 35%.
In the financial year 2022-2023, the first year of its operation, the levy raised £2.6B (AUD$3.5B). In the following 12-month period it raised £3.6B (AUD$6.8B).
That’s money the UK Government could spend on their citizens, who owned the oil and gas.
The Great Australian Gas Rip-Off
The Australia Institute summarises the situation well.
[Japanese Gas Company] NPEX exports more gas each year than is used in New South Wales, Victoria and South Australia combined. It sells no gas to Australians, outside of emergencies. It pays no royalties, no Petroleum Resource Rent Tax (PRRT) and paid no corporate tax on $21 billion in gas exports between 2015 and 2025. I guess it’s not hard to make money when Australia effectively gives you its gas for free.
In fact, you could argue that Japan is better at extracting value from Australia’s gas exports than we are. Japan is on-selling the Australian gas it imports for domestic use, according to new analysis from (IEEFA). It found that Japanese companies resold between AUD$11-14 billion worth of Australian LNG in 2024, with profits likely exceeding AUD$1 billion-or roughly the same as Australia collects from the Petroleum Resource Rent Tax.
We really are a bunch of mugs.
Inpex and Australia’s gas rip-off. Billions in revenue, crumbs in tax
We need a gas export tax
On March 17 the Australian Council of Trade Unions (ACTU) publicly called for a 25 per cent tax on gas exports so that all Australians should benefit from the sale of our LNG.
Taxing Australia’s gas exports at 25% would have raised $17.1 billion in the 2023-2024 financial year—and would raise far more in the coming year due to war-time price surges.
While working Australians are dealing with surging costs due to the war in Iran, giant gas corporations are set to make a killing off skyrocketing oil and gas prices.
“The government must move urgently to tax our gas exports at 25% or once again multinational corporations will reap the profits while Australians miss out”, the ACTU stated in a media release.
The Government has since hinted it is considering such a tax.
“Wolf,” cried the wolf
The gas industry, in true and tried form, has responded swiftly to the news.
The Australian Energy Producers’ Chief Executive Samantha McCulloch came out on Friday crying “wolf”.
“This would be the worst possible time for Australia’s economy and energy security to impose a new, retrospective tax on an essential energy sector”.
It turns out that ‘never’ is their best time.
“Imposing higher taxes on Australian gas producers would stop investment in new gas supply, leading to gas shortfalls, higher energy prices, and the closure of Australian industries that rely on reliable and affordable gas.”
The gas industry rolls out the “it will stop investment” all the time. They’ve done it several times in response to past calls for a gas reservation scheme. The problem is that the facts work against the statement. When Western Australia introduced a gas reservations scheme, investment went up.
Other countries have gas reservation policies and windfall taxes. The gas industry continues to invest.
Government Advice Recently Release in an MWM FOI Fight (Source: Government)
To be fair, there are some Australian Energy Producer (formally Australian Petroleum Exploration Association) funded studies that suggest Western Australia has suffered for their sins.
“The current surging petrol and diesel prices in Australia underscore just how important it is that we ensure Australia remains able to meet its own gas needs through secure domestic supply,” Ms McCulloch.
Gas shortage claims a fantasy
And of course, the gas shortage claim is nothing short of complete fantasy. There exists an Australian Domestic Gas Security Mechanism (which I personally negotiated with Government in 2017 when working as an advisor to Senator Xenophon) which prevents the export of gas from Australia if here is a shortage in the domestic market.
There can be no shortage of gas in Australia, only a shortage of export gas. And the thing is Samantha McCulloch knows it. How do I know this – I discussed this with her in a robust exchange that took place between Senator Lambie, myself and Ms McCulloch in waiting room of Senator Lambie’s Senate suite in early 2025.
But she is paid well to say what she does.
She also expressed in the Australian Energy Producers’ media release:
“While international gas prices have surged, Australian gas prices remain relatively low, and the market is well-supplied. We should not take this for granted.”
Letting Australians have access to Australian gas at reasonable prices. We should be so lucky – thanks for the favour, Ms McCulloch!
McCulloch is not alone in shedding crocodile tears.
Shell Australia country chair Cecile Wake said energy security relied on ongoing investment in new supply, and warned any proposal contemplating further tax would “undermine investment and erode energy security“.
“Doing so would be short-sighted and opportunistic, particularly when the domestic gas market is well-supplied, and domestic gas prices remain materially below international pricing”
“Imposing a levy on LNG exports at this time would send the worst possible signals for investment in gas supply for the local market and to our regional trading partners, who need us more than ever, and who provide critical fuels to Australia.”
Ms Wake is operating from the same playbook. Never let the truth get in the way of lobbying efforts.
Better late than never
The Government should act on a 25% export tax.
The only problem with the Government’s hints to date is that they will likely impose the tax through the budget. That’s more than a month of super profits away.
The tax should have been imposed decades ago. All the Government does by waiting, is rob citizens of yet another month of returns from the gas they own … and expose themselves to what will be a well-funded campaign from the cartel.
Rex Patrick is a former Senator for South Australia and, earlier, a submariner in the armed forces. Best known as an anti-corruption and transparency crusader, Rex is also known as the "Transparency Warrior."