Factcheck: The ASU is right, a gas tax could pay for vital community services

Last week, Greens leader Larissa Waters, in asking Foreign Minister Penny Wong about funding for housing, public health and aged care, referred to the Australian Services Union (ASU)’s claim about a gas export tax:

As the Australian Services Union has noted, the $17 billion raised by a gas export tax is “vastly more than the roughly two billion than we currently receive under the PRRT. These public funds could resource the vital community services Australians rely on.”

That comes from the ASU’s submission to the Taxation of Gas Resources inquiry, where they endorsed replacing the current PRRT system with a flat 25% tax on gas exports.

Is the ASU right?

The Petroleum Resources Rent Tax, or PRRT, is the Federal Government’s tax on oil and gas resources. It was introduced in 1988 to ensure Australians benefit from the oil and gas that we collectively own. It was originally designed for oil extraction, also applies to offshore gas fields.

The problem is that the PRRT’s complicated design makes it easy for big gas companies to avoid paying the tax. In fact, as the Treasury Department stated in 2023, “to date, not a single LNG project has paid any Petroleum Resource Rent Tax (PRRT) and many are not expected to pay significant amounts of PRRT until the 2030s.”

While the PRRT has been slightly changed since then, it still only raises small amounts of revenue, coming in under $2 billion in the last two budgets – even worse than the ASU claimed.

As noted by independent senator David Pocock in a viral clip, this is less than the Commonwealth government raises in beer tax.

A 25% tax on gas exports, on the other hand, would be much more difficult for gas companies to avoid. According to Australia Institute research, such a tax would have raised over $17 billion each year on average since 2022. If the Albanese government had implemented one when they first took office that year, they would have raised over $70 billion in revenue by now.

That’s enough money for the Albanese government to have deposited $2,500 into the bank accounts of each and every Australian, including children.

It also would have been enough to fund free university and TAFE education, or free universal childcare.

And, despite claims that funding for the National Disability Insurance Scheme was “unsustainable”, it’s almost double the $35 billion in “savings” projected from severe cuts in this year’s budget.

The Australian Services Union is right, a 25% gas tax would raise far more than PRRT, and enough to pay for vital community services Australians rely on.

Verdict: True.