Taxing gas to fund health, schools and other good things

The $17 billion in revenue that Australia is foregoing each year by failing to properly tax gas exports is enough to fund many of the essential services Australians rely on. 

One example is the Pharmaceutical Benefits Scheme (PBS), which purchases approved medicines from pharmaceutical companies and subsidises their cost for Australian patients. 

The PBS ensures Australians pay dramatically less for prescription medicines than people in America, where medicine purchasing is left to market forces. For example, Australians pay around $21 for atorvastatin – a cholesterol-lowering drug and one of the country’s most prescribed medicines – compared to $2,628 in the United States, a 125-fold difference. Contraceptive pills are around 22 times cheaper here, while the common antibiotic azithromycin costs roughly 20 times less. 

In 2023–24, the PBS saved Australians $17.7 billion by absorbing most of the cost of the 930 medicines it subsidises. 

That’s a lot of money, but the scheme could be almost entirely funded by revenue from a modest 25% flat tax on gas exports. By comparison, the current Petroleum Resource Rent Tax (PRRT) raises only around $1.4 billion annually – less than the revenue collected from Australia’s beer excise.  

What else could $17 billion fund? 

A proper tax on exported gas could also fully or partially fund other essential medical services. 

For example, eliminating out-of-pocket costs for GP visits would cost approximately $4 billion annually. It would make universal primary care genuinely possible, and it’d only cost a fraction of what a 25% tax on gas exports could raise.  

In aged care, where Commonwealth spending is around $35 billion per year, an additional $17 billion could dramatically improve staffing, quality, and access.  

The foregone gas revenue is also equivalent to roughly one-third of current annual NDIS expenditure. The NDIS undoubtedly requires stronger governance and prevention of fraud. But the government’s proposal to cut 160,000 participants from the scheme could be softened with additional revenue. 

The Commonwealth is aiming to increase schools spending to $33 billion a year. Given that 98% of government schools are underfunded, an extra $17 billion could help to attract more teachers and specialist staff, reduce class sizes and provide additional infrastructure and resources to schools serving the most disadvantaged communities – ensuring that every Australian child receives a good education regardless of their postcode. 

Remote export terminals don’t treat sick Australians 

The PBS is a direct investment in Australia’s collective wellbeing. By ensuring people are not priced out of essential medicines, it improves health, productivity, and social participation. 

The same is true of primary care, aged care, disability support as well as schools and education. 

Gas companies argue that stronger taxation would deter investment. This claim is questionable: multinational energy firms continue investing in jurisdictions with substantially higher resource taxes than Australia’s. 

More importantly, this investment benefits multinational corporations through the export of a finite national resource. It doesn’t fund hospitals, schools, transport, or other public assets that improve productivity, increase tax revenue over time, and strengthen democracy and social cohesion. 

Remote export terminals don’t help Australians in need or educate our children. 

The PBS, Medicare and NDIS do. Schools and teachers do. 

We don’t need to rob Peter to pay Paul 

At present, funding services that directly improve Australians’ quality of life often requires cuts elsewhere. 

It doesn’t have to be this way.  

Every year we could have an additional $17 billion flow into the coffers – simply by insisting on a fair return on a natural resource that belongs to us.